What Is a Good Option and Purchase Agreement for Screenplays?
- When a production company is interested in acquiring a screenplay there are two ways they can go about obtaining the rights to it: an option or purchase.
An option is an agreement that gives the company the right to start pre-production and work on the script to see if it would like to continue the process and put it on its slate of films or release the rights at the end of the option period. By optioning a screenplay it means that screenplay can no longer be shopped around to other companies during the term of the option. This essentially takes it off the market while the company decides if it wants to buy it.
A purchase agreement is an outright purchase of the rights, after which the company owns the work and may do whatever it would like with it. - The term of the option is variable. A good option agreement is six months and may or may not include an option to extend for a specified period of time for an additional fee. That way your script isn't off the market for too long in case the company decides not to purchase it; you still make money and are in the running for a movie to be made.
- If you are offered an option agreement of $1,000 for six months, for example, you should think about whether that amount is enough for you to take the script off the market for six months and risk the opportunity to sell it to someone else for possibly more money. This decision depends to a great extent on how much other interest you have found for your script.
- The amount of an option or purchase relies on a number of factors: union status, the company making the agreement, potential of the script, agent negotiations and bidding interest of others. Big blockbuster scripts are going to sell for more than a dark, independent-feeling drama because the potential income from the blockbuster eclipses the smaller film, even though its investment will also be significantly greater.
An option agreement can be made for as little as $1. It must involve some monetary exchange to be legally binding; otherwise, a free option allows the writer to shop the script elsewhere during that period.
Most options are for 500 to a few thousand dollars and a term of six months to a year. The average purchase price varies because of significant differences between what independents and studios pay. According to the Writers Guild of America, the average price for an original theatrical screenplay is $58,477 to $109, 783. - Be careful to look at agreements and clauses attached to those agreements to ensure there aren't any hidden elements that extend an option without payment or alter the payment schedule for a purchase. Also investigate the company making the agreement to ensure it is legitimate. You have to protect yourself and your work at all times. Get everything in writing.
