5 Things to Do Before Signing a Distribution Deal

Over the weekend, I had coffee with a filmmaking friend who told me a short he'd made had suddenly landed distribution, even though it had been sitting for several years on his YouTube channel.

We were both happy about it, but he mentioned that he was naturally suspicious at first. He enjoys making money as a filmmaker for himself, he said, not making money for someone else, which makes sense. But he also saw an opportunity to reach a larger audience. So, he weighed his options carefully.

Many filmmakers are so desperate for that recognition that they're ready to sign whatever is put in front of them just to get the thing out into the world. And I get that, too.

Getting a distribution offer feels like validation. But you want to make a smart decision for yourself and your project.

Before you sign anything, take a breath and do your homework. Distribution is complicated, and it's a business. You should treat it like one. Your film deserves to find an audience, and your hard work deserves compensation. But you've got to be careful and strategic about the deal you accept.

Here's what to do first.

Research the Distributor

This should be obvious, but you'd be surprised how many filmmakers don't do a cursory background check.

When a distributor comes along, you need to investigate them like you're hiring them.

Look at their website. What does their slate look like? Have they put out much already? Do they specialize in your genre? Do they have the connections and expertise to actually get your film seen?

Talk to other filmmakers who've worked with them, if you have access to that information. Ask around at festivals, check filmmaker Facebook groups, and look up resources like The Film Collaborative's distributor report card. Try to find out if the company delivers on its promises.

Check if they've been sued. You can search court dockets in Los Angeles to see if there are outstanding legal issues. Entertainment attorney Mark Litwak notes that he once discovered a distributor was over $2 million behind on royalty payments just by reading a Standard & Poor's report.

Hire a Rep or Attorney Early

We're creative people. We probably don't know all the legalese behind a complicated business deal.

That's why bringing in a producer's rep or entertainment attorney can be helpful. According to Entertainment Partners, these professionals understand the nuances you might miss and have industry relationships that can open doors, especially if you're newer to the business.

Ideally, you want someone involved before you even finish your film. A good rep can help you make decisions about festival submissions and potentially get your film in front of the right people through their existing relationships.

As Guerrilla Rep Media writes, reps and producers of marketing and distribution often have connections that can help bypass initial festival screening rounds, giving you a better shot at acceptance.

Reputable producer's reps typically work on commission, taking somewhere between five and 15 percent of your film's sales. If someone asks for a large upfront retainer with no guarantee they'll sell your film, that's a red flag.

Some reps charge for specific services like creating business plans or developing distribution strategies, and that's reasonable. But if they're just brokering your film and making demands, look elsewhere.

What If You Can't Afford a Lawyer?

We get it. You just spent every dollar you had making your film. The idea of hiring an entertainment attorney feels impossible.

But there are options for you, too.

The Filmmakers Legal Clinic at Cardozo Law School provides completely free legal services to independent filmmakers, particularly those working on social justice projects.

Similarly, the Entertainment Law Clinic at Chapman University offers free production legal services to ultra-low-budget filmmakers.

There's also a network of Volunteer Lawyers for the Arts organizations across the country. VLA in New York, for instance, provides free or low-fee legal services to qualifying artists on all arts-related legal matters. Similar organizations exist in Washington, D.C., Philadelphia, Cleveland, Miami, and other cities. They typically offer legal clinics and referrals to volunteer attorneys.

Income eligibility requirements vary by organization, but if you're scraping by financially, you likely qualify.

You can also look into affordable contract template services designed for filmmakers, though these should never replace actual legal advice when dealing with distribution.

Understand the Deal Structure

First, figure out what kind of deal you're being offered. According to Rolling Stone's Culture Council, there are typically two main structures.

An expense cap deal means the distributor takes a percentage of earnings plus charges you for marketing expenses, which can run $30K to $50K or more. You won't see any money until those expenses are recouped, and by then your film is likely old news.

A gross deal, on the other hand, means no expenses are deducted. You and the distributor split all earnings from day one according to your agreement. This forces the distributor to stay engaged because they only make money when you do. According to Rolling Stone, many experienced filmmakers prefer a smaller percentage of gross revenues over a larger percentage of net, because net deals often mean you'll never see a penny.

Pay close attention to the contract term. How long is the distributor controlling your film?

Standard deals run between five and seven years, though some filmmakers have negotiated terms as short as three years. Entertainment attorney resources suggest structuring deals with a short initial term followed by extensions if performance milestones are met. For instance, a two-year initial term that extends if the distributor returns a certain amount of money to you.

Watch out for cross-collateralization. This is when a distributor bundles your film with several others and pools all the expenses. Try to specify that your film's revenues won't be subject to costs from other titles.

Look for caps on distribution expenses. Without them, costs can spiral endlessly.

Check what rights you're granting. Are you giving away worldwide rights, or just domestic? Theatrical, streaming, broadcast, and home video—are these bundled or separate?

Get Audit Rights and Reversion

Make sure your contract includes the right to audit the distributor's books. Indie Film Hustle writes that one filmmaker who insisted on this clause later went into the distributor's office, checked their books, and found thousands of dollars owed to them.

Your audit rights should give you enough time to challenge accounting statements.

Require quarterly accounting statements. You need regular reporting so you can track how your film is performing and catch discrepancies early.

Also include a reversion clause. The contract should state that if the company closes or fails to meet its obligations, all rights to your film automatically return to you.

Without this, your film could end up in legal limbo.

Create Competition if Possible

Desperation just leads to bad deals. Don't rush.

And if you have interest from multiple distributors, that's leverage. You'll get the best distribution deal when you have more than one distributor interested in acquiring your film.

Even if you only have one serious offer, take time to understand what you're signing. Have your attorney or rep review everything. Ask questions about anything you don't understand.