FREQUENTLY ASKED QUESTIONS:
NON-EXCLUSIVE DISTRIBUTION AGREEMENT (JUL 2024)
Welcome to our Contracts & Agreements FAQ page. Here, you'll find answers to the most frequently asked questions about our distribution contracts. Whether you're a new client or a long-term partner, our goal is to provide you with clear and concise information to help you navigate and understand our agreements. We update this page regularly to address as many concerns as possible and ensure you have the latest information. If you have any additional questions, please don't hesitate to contact our support team. We're here to ensure a smooth and transparent experience for all our clients.
2.1.
LICENSOR hereby licenses to DISTRIBUTOR the following rights (“Licensed Rights”) with respect to the Properties, subject to any specified Holdbacks:
[table omitted]
A. Who is the LICENSOR granting these rights to, the DISTRIBUTOR or the Content Platform?
The rights enumerated in Clause 2.1 are the specific rights you are granting us, as your distributor, to exploit on your behalf when opportunities arise. These rights form the foundation of our distribution agreement and define the distribution channels our company can leverage for your content.
B. Does this clause imply that the LICENSOR will not be informed about the specific rights granted to content buyers or platforms by the DISTRIBUTOR before any commitments are made?
No. Clause 5.3 explicitly states that the Licensor must be informed about the nature of any deal before it is finalized. While Clause 2.1 outlines the rights granted to us as your distributor to exploit, it does not restrict the Licensor from ultimately deciding which rights to grant to each platform. However, if you wish to delay granting specific rights or restrict engagement with certain platforms, you may place a “Holdback” on them. Please refer to the definition of “Holdbacks” below for more details.
C. What is a "Holdback"?
In film distribution agreements, a "Holdback" refers to the period during which the Distributor agrees to refrain from releasing the film in certain markets or platforms for a specified time (e.g. six months, one year, etc.). This is typically used to maximize a film’s revenue by strategically timing its release in different regions or on various platforms. An example of a Holdback is: Europe, 6 months.
D. Can the Licensor place a Holdback on every deal to ensure they are informed of the specific rights granted to Content Buyers or Platforms before the Distributor makes any commitments?
No. Clause 5.3 explicitly states that the Licensor must be informed about the nature of any deal before it is finalized. Using a holdback to enforce this is ineffective and ultimately detrimental to the Licensor, as a holdback will restrict our company from exploiting the rights altogether, per Clause 7.0. This means that we cannot present the content to any platforms or enter into any deals during the Holdback period. Therefore, there will be no deals for the Licensor to review or reject until the Holdback period expires.
E. How does the Licensor know which rights the Distributor will grant to each Content Platform?
Section 5.3 (i) explicitly requires that the Licensor be informed about the specific rights being granted to each platform before the content is sold or licensed. This ensures transparency and allows the Licensor to stay informed about all rights-related decisions.
5.1.
DISTRIBUTOR and LICENSOR shall mutually agree on the time, manner, and terms of distribution, exhibition, licensing, exploitation, advertising, and marketing of the Properties. Both parties will collaborate to establish and agree upon a distribution strategy for the initial and subsequent release of the Properties (the “Agreed Strategy”) at the start of the Agency Period. The Agreed Strategy will govern the DISTRIBUTOR’s efforts throughout the Agency Period. The parties hereby agree to meet from time to time to review and, if necessary, amend the Agreed Strategy in accordance with market realities or the LICENSOR's interests. All deals negotiated and executed by the DISTRIBUTOR in accordance with the Agreed Strategy shall be legal and binding. The LICENSOR agrees not to impede or seek the cancellation of any deal negotiated and executed in line with the Agreed Strategy.
Omitted.
5.3.
DISTRIBUTOR may at its sole discretion withhold the name of a Content Buyer from LICENSOR prior to the sale or licensing of the Properties, provided that the underlisted information pertinent to the deal is provided to LICENSOR prior to the execution of the sale or licensing deal:
(i) The right(s) being granted to the Content Buyer per Section 2.0;
(ii) The license fee being offered by the Content Buyer;
(iii) The territory for which the Properties are being licensed; and
(iv) The duration for which the Properties are being licensed.
A. Why might the name of a Content Buyer be withheld from the LICENSOR?
The name of a Content Buyer might be withheld to protect ongoing negotiations, maintain competitive advantage, or comply with confidentiality agreements that our company may have with the Content Buyer. This is our standard operating procedure.
B. How will the LICENSOR be assured that the withholding of the Content Buyer’s name does not negatively impact the LICENSOR's interests? What safeguards are in place to protect he LICENSOR's interests in such situations?
Prior to the execution of the sale or licensing deal, our company will furnish you with detailed information about the terms and conditions of the deal, including the scope of rights, territory, duration, and financial terms such as pricing and payment schedule, as per Clause 5.3. This allows you to make an informed decision when greenlighting the deal. Furthermore, after the deal is concluded and payment received, our company will disclose the name of the Content Buyer as required by Clause 5.4, and provide you with a copy of the signed agreement, per Clause 5.1. Lastly, the concluded deal will only stand if it complies with the Agreed Strategy per Clause 5.1, ensuring the ultimate protection of your interests throughout the process.
C. Can the LICENSOR request the name of the Content Buyer under certain conditions?
Sadly, no. The disclosure of a Content Buyer's name is at our company's sole discretion and there are currently no exceptions to this policy. You can check again in the future for any changes hereunder.
D. Can the LICENSOR request additional information beyond what is underlisted?
If you require additional information beyond what is initially provided, you can certainly request it, and we will do our best to accommodate your needs while respecting any contractual constraints.
E. Will the LICENSOR be notified immediately after the sale or licensing deal is executed?
Yes, you will be notified promptly after the execution of the sale or licensing deal. The identity of the Content Buyer will be disclosed once payment has been effected by the Content Buyer, per Clause 5.4.
F. How will this clause affect the LICENSOR's ability to track and manage the distribution of their Properties?
This clause should not negatively impact your ability to track and manage the distribution of your Properties. You will receive detailed information about each deal prior to the execution, and the identity of the Content Buyer will be disclosed once our company receives payment allowing you to effectively monitor and manage the distribution process.
G. Are there any potential conflicts of interest that could arise from withholding the name of the Content Buyer?
Our contracts are designed to mitigate potential conflicts of interest by: (i) allowing Holdbacks on specific rights and platforms; (ii) enabling mutual establishment and amendment of the Agreed Strategy; and (iii) ensuring that only deals aligned with the Agreed Strategy are binding. These provisions offer multiple safeguards for both parties. Should a conflict ever arise, we will address it transparently and collaboratively.
H. What is the process for resolving disputes related to this clause?
Any disputes related to this clause will be addressed through the dispute resolution mechanism outlined in our agreement.
6.1.
LICENSOR hereby irrevocably agrees not to circumvent, avoid, bypass, or obviate, directly or indirectly, the negotiation of deals, conclusion of deals, and payments of fees, commissions, or any other form of compensations due to DISTRIBUTOR accruing from any transaction with any Content Buyer, in connection with the operation of this Agreement.
A. What specific actions would be considered as circumventing or bypassing the DISTRIBUTOR under this clause?
Circumventing or bypassing the distributor would include any actions where the licensor attempts to engage with content buyers directly to negotiate deals, conclude deals, or handle payments that would typically involve the distributor. This could involve reaching out to content buyers identified or introduced by our company, or managing sales independently without the our company's involvement.
B. Can you provide examples of what would constitute indirect circumvention of the DISTRIBUTOR's rights and compensations?
Indirect circumvention could include situations where the licensor uses intermediaries, affiliates, or related entities to negotiate or finalize deals with content buyers, effectively bypassing the our company. For example, if the licensor's affiliate company engages with content buyers directly after the initial introduction by our company, this would be considered indirect circumvention.
C. How long is this non-circumvention agreement in effect? Does it extend beyond the termination of the distribution agreement?
See Clause 6.5.
D. Who qualifies as a "Content Buyer" under this agreement? Are there any specific criteria or exclusions?
The term "Content Buyer" is defined in Clause 5.2 as "corporations, firms, partners, affiliates, individuals, or other distributors or interested buyers." Clause 6.0 specfically refers to content buyer identified and introduced by our company, that express interest in or engage in purchasing, licensing, or otherwise exploiting the Properties.
E. What mechanisms are in place to resolve disputes if the LICENSOR is accused of circumventing the DISTRIBUTOR?
Clause 17.0 outlines the procedures for assessing instances of circumvention and provides remedies in the event of a default. Any other disputes arising related to this clause will be resolved through the dispute resolution mechanism specified in this agreement.
F. Are there any circumstances under which the LICENSOR can directly negotiate with Content Buyers identified by the DISTRIBUTOR without violating this clause?
No.
G. Can this clause be amended or renegotiated during the term of the agreement, and if so, how?
The clause can be amended or renegotiated if both parties agree in writing to the changes. This allows for flexibility in adapting to changing circumstances or business needs.
H. How will the DISTRIBUTOR ensure that all fees, commissions, and compensations due are transparently reported to the LICENSOR?
The distributor is obligated to provide regular and detailed reports to the licensor, outlining all fees, commissions, and compensations due, per Clause 13.0.
I. How does this clause impact existing or future agreements the LICENSOR may have with other distributors or agents?
This clause would require the licensor to ensure that any third-party agreements do not conflict with the rights and compensations due to the distributor under this agreement (see Clause 17.0). Any potential conflicts should be discussed and resolved with the distributor before entering into such agreements.
J. What are the consequences for the LICENSOR if they are found to have circumvented the DISTRIBUTOR in violation of this clause?
See Clause 17.0, "Defaults and Remedies"
10.2.
LICENSOR’s Share shall mean all of the Properties Gross Receipts or Adjusted Receipts, remaining after DISTRIBUTOR has recouped in first position its commission, Recoupable Expenses, any Advance and Interest until DISTRIBUTOR is fully recouped.
A. What constitutes "Recoupable Expenses" in this context?
Recoupable Expenses are well described under Clause 12.0.
B. Could you provide clarity on when an Advance would apply in this Agreement?
An "Advance" applies when the DISTRIBUTOR provides an upfront payment to the LICENSOR against future revenue generated by the Properties. This amount is recoupable by the DISTRIBUTOR from the LICENSOR's Share of Gross Receipts or Adjusted Receipts before it is remitted to the LICENSOR.
C. Could you please clarify the circumstances under which Interest would apply in this Agreement?
"Interest" would apply if the Advance or any recoupable expenses are subject to interest charges as agreed upon in the contract. This means that in addition to recouping the principal amount of the Advance or expenses, the DISTRIBUTOR is also entitled to recover the agreed-upon interest on these amounts.
D. What happens if the DISTRIBUTOR does not fully recoup its expenses and advances?
If the DISTRIBUTOR does not fully recoup its expenses, advances, and interest, the LICENSOR will not receive any share of the Gross Receipts or Adjusted Receipts until the DISTRIBUTOR has been fully recouped. This means the DISTRIBUTOR is in the first position for recouping its costs.
E. When and how will the LICENSOR be informed about the recoupment status of the DISTRIBUTOR?
The distributor (our company) will provide regular accounting statements to the licensor, detailing the Gross Receipts, expenses, advances, interest, and the recoupment status.
F. What happens after the DISTRIBUTOR is fully recouped?
Once the DISTRIBUTOR has fully recouped its commission, Recoupable Expenses, any Advance, and Interest, the remaining Gross Receipts or Adjusted Receipts will be allocated to the LICENSOR as their Share.
G. Are there any limits on the types of expenses that can be recouped by the DISTRIBUTOR?
Yes. See Clause 12.0.
12.1.
DISTRIBUTOR shall be entitled to recoup its actual, direct, and customary out-of-pocket costs and expenses incurred in servicing the Properties ("Recoupable Expenses"), provided that such expenses have been approved in writing by LICENSOR prior to being incurred. Recoupable Expenses include, but are not limited to, delivery costs, editing costs, costs of marketing and promotional materials and activities, distribution fees, and legal fees.
A. What legal fees are referred to in this clause?
The legal fees referred to in this context are typically those incurred by the DISTRIBUTOR for services directly related to the distribution and servicing of the Properties. These fees must be approved in writing by the LICENSOR to qualify as Recoupable Expenses. They may include: (i) Costs associated with obtaining legal advice to ensure compliance with relevant laws and regulations affecting the distribution and marketing of the Properties; (ii) Fees related to protecting and enforcing intellectual property rights, including trademarks, copyrights, and patents related to the Properties; and (iii) Costs for legal representation in any disputes or litigation that arise in connection with the distribution of the Properties. Such legal fees, just like every Recoupable Expense, can only be incurred with the licensor's prior written permission.