Monday, April 10, 2006

How to Navigate Foreign Sales Agents

One of my clients this week asked about some typical sales agent rip-off's so I decided to list three ways that you can 'protect' yourselves from sales agents.

First of all, for all of you who don't know, a foreign sales agent (sometimes referred to as just sales agent), is a person or company who sells your film to distributors around the world. In other words, a sales agents finds distribution for your film by selling it to broadcasters, dvd companies, and theatrical distribution companies.

As some of you might know, I was a foreign sales agent myself for many years, so I can see both sides of the story. Filmmakers normally complain that sales agents sign them to lengthy contracts and then don't pay them for the sales the make. Sales Agencies retort that it costs a lot of money to market and distribute your film, so they are entitled to take a hefty commission and recoup their marketing fees before paying out to filmmakers.

Here's some suggestions of a few things you can do that will protect you from the most extreme cases of sales agency rip-off:

1. Negotiate the sales agency commission

Typical commissions for sales agents are anywhere from 10% to 30%. They will likely ask for something on the higher end at first, but you can actually negotiate them down. I think a fair commission for sales agency services are 20%-25%.

2. Put a cap on the agent's marketing expenses

Typical marketing expenses that sales agents will want to claim are anywhere from $10K to $30K per film. Marketing expenses include things like making dubs to send out to buyers, shipping costs, publicity costs like creating artwork and fliers to send out, and finally the expensive taking your film to the Markets costs. Now in defense of sales agents, these are legitimate expenses. However, these expenses can be negotiated - and since the sales agent will have to recoup whatever expenses are agreed before the filmmaker sees a dime, it is in your best interest to negotiate these as low as possible. Here's another thing, if you agree to provide your own artwork to the agency, as well as your own dubs and maybe FEDEX account number, you will have some real leverage.

3. Ask for producers approval

This is a big one, and sales agents will balk when you ask for this, but insist on producers approval before they conclude a sale with a distributor. Basically this insures you against them selling your film for pennies on the dollar which is what sales agents will do by selling a 'package' of films to a buyer. When I was selling packages, there were certain films I had to leave out of the package because I knew the producer would never allow us to sell their film for $1K or $2K - it ties up the rights in that territory and the producer will likely never see any money. So make sure this added to your contract with the sales agent, and hold them accountable to it.

Hope this helps! As always, if you have any questions just email me :)


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