What is a Shopping Agreement?

What happens when you see a book or read an article and think, "Wow, this has to be a movie or TV show?" Do you just lament your lack of connections or money to option it? Well, don't do that! Making waves in the movie and TV business is about taking chances.

If there's one thing that's clear, movies and TV producers and studios love ideas based on a property with proven audiences. They think this audience will translate into ticket sales or viewers without having to spend as much time and money selling the vision to the public.

But how can an Average Joe or Average Jane get a hold of material they think would be great to adapt or produce for the studios? Buying the right is probably out of reach and optioning titles can get pricey, although some people may offer their work at a discount.

The answer lies inside a shopping agreement.

So we're going to cover what those agreements are today and look at how you can use them to get valuable IP on your side before pitching to producers or studios.

Let's dive in.

What is a shopping agreement?

A shopping agreement or "producer shopping agreement" allows a producer or writer to “shop” a film or television project exclusively to financing entities such as studios, networks, and production companies for a fixed amount of time.

You would use one of these if you found a book, article, or another property you think would inspire a movie or TV show.

This document ensures you have the right to sell that entity or adapt it exclusively so that a big-name producer or director cannot swoop in and take it from you. You only have the rights for a limited amount of time, as stated in the contract.

The shopping agreement makes you attached to the project as a producer (and writer or director, depending on your end game). In the agreement, the copyright owner (screenwriter/ television writer/author/playwright, etc.) of the original project grants this right to the producer.

What's great about these deals is that the copyright owner retains complete ownership of the literary property until a studio, network, or production company buys all of the rights or some of the rights to the literary property in an agreement to be negotiated with the copyright owner.

The owner will negotiate the sale of rights to the property, while the producer will negotiate its attachment to the project.

So you don't have to front the money, just the legwork to get it sold.

How do you make a shopping agreement work for you?

When you create a shopping agreement, you have a limited amount of time to control the project. So you need to get to shopping it around right away. You are contractually obligated to pitch the property to prospective buyers or financiers with the aim of getting it out into the world.

This should be your ticket into bigger rooms where you find interest in the property.

Shopping Agreement vs. Option Agreement

Though shopping agreements are similar to option agreements, writers and producers shouldn’t be misled by the notion that they’re equivalent in all aspects.

An option is done with money paid to the copyright owner upfront. Unlike an option, in theshopping agreement,the copyright owner makes the purchase deal when the producer finds a studio, network, or production company that wants to buy the property.

If you are the copyright owner, this gives you all the power in the situation. You get to be the one who chooses where you sell. So if you like Netflix or Disney, or someone offers more cash or a guaranteed sequel, you can pick the best thing for you.

This also means the project cannot move forward unless both the copyright owner and the producer (who controls the shopping agreement) each make their separate deals.

The downsides of the shopping agreement

The main thing people seem to worry about with these agreements is the difference in the writer’s power to approve the terms of the sale of the property. Let's compare a couple.

Under an option agreement, the purchase price, back-end compensation, passive royalties, and other terms regarding the writer’s sale of the property are agreed upon in advance by the writer and producer.

That means at any time during the option, the producer (or their assignee) can exercise their option and purchase the motion picture and television rights to the property by simply paying the agreed-upon purchase price.

So if some other producers are coming in hot and heavy on the project, you can take it off the market.

In contrast, in a shopping agreement, the writer reserves the exclusive right to approve or disapprove. That means they could sell it to someone else. The producer may bring the writer a solid offer, but the writer can veto it because they don't like the company because or they are holding out for an unrealistic amount of money or simply because they no longer like the producer.

And then the agreement term could end, and they could sell it without you!

So think carefully and always consult a lawyer before entering into one of these agreements. And always use legal advice from a real lawyer.

What else do you need to know about a shopping agreement?

When you're doing one of these agreements, always get it in writing. Oral agreements are nice, but they really have no legal standing. Getting things on paper will help when you decide on the term of the contract and the compensation.

For instance, they may only allow you to shop the idea for six months or a year.

Also, they may say the minimum they'll sell it for is $100,000, so you have to look for that number or know there's no way you'll be able to sell it.

All in all, these are things you should put into the contract and things you should consult a lawyer about moving forward.

Let us know what you think about shopping agreements in the comments and offer any advice you think the community may find helpful.