July 7, 2023
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A Producer's Guide to Option Agreements

Daniela Bailes
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Production Option Template
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Intellectual Property (more commonly known as IP) is all the rage in Hollywood and likely will be for years to come. Getting original projects made is increasingly difficult. Thus, optioning existing creative material to adapt can be a smart way to pique a studio’s interest and/or secure financing.

However, optioning material isn’t limited to existing IP. If you want to get into production quickly, optioning an original script is definitely the fastest way to do so. Particularly, if you are targeting the independent film market. 

Whether you’re looking to adapt IP, or produce an original script, having an option agreement with the rights holder is important. It can be a way to increase your own leverage in staying on the project and maintaining creative control. 

IP can include anything from a short story to a video game. But how do you secure movie rights for existing IP and original material? It all starts with an option agreement.

Download our option agreement template

Before we give you the low-down on film option agreements, start by downloading this free option agreement template! Please note that this template is merely that: a template. It is not a substitute for consultation with a lawyer about your specific situation. We are not legal experts this template should not be taken as legal consultation.

Free Resource

Production Option Template

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What is an option agreement?

An option agreement is a (preferably) legal agreement between a producer and writer or rights-holder(s) giving the producer a set amount of time to represent the project. 

The producer is then able to purchase the rights at a later date. Usually, that purchase date would commence upon securing financing or making a sale to a studio. The term for completing this type of transaction is to “exercise the option.” 

The initial option amount can be anything. Several million in the case of best-selling novels, all the way down to Stephen King’s famous indie-film Dollar Baby Agreement. If the option is not exercised in a specific amount of time, the rights usually revert to the owner.

Think of an option agreement as a car down payment. You will have to pay off the entire car eventually.

A Producers Guide to Option Agreements - Wrapbook - Hand Off
What is an option agreement? It’s paying “just enough” to drive the car off the lot. SOURCE

However in this case, if the car doesn’t work out, you can still return it to the dealership. Usually, though, you cannot get that option money back.

An option agreement can still apply if you want to begin the process of securing rights to an original screenplay as opposed to buying it outright. 

How to buy film rights

There’s multiple steps in buying film rights. Starting with researching who owns the material, reaching out to rights holders, and negotiating the option. There are also some additional ways to option or use IP we’ll touch upon as well. 

Research your options

So you’ve read a fantastic book, seen a thought-provoking film from the 1930’s, or stayed up all night playing a killer indie video game, and think; wow, that would make a great film or series. 

What comes next?

First thing, you need to do your research to determine who owns it. Where you start depends on what you’re looking to get the movie rights to.

Researching older IP

Regarding film rights, it always pays to check the public domain. Works in the public domain belong to the public‌ and therefore are exempt from traditional US copyright laws. This is why there have been so many varied adaptations of fairy tales or Sherlock Holmes over the years.

A Producers Guide to Option Agreements - Wrapbook - Sherlock Holmes
When you don’t need an option agreement, you can have not one but THREE tortured geniuses! SOURCE

A few factors will help determine if a work is in the public domain. They include: 

The date of publication. In the United States, works that were published before 1923 are in the public domain.

The copyright renewal status. For works that were published between 1923 and 1977, the copyright status may depend on whether the copyright was renewed.

The copyright term. The copyright term for works created after 1977 is the life of the author plus 70 years.

It is important to note that the copyright status of a work can vary depending on the country in which it was created. Therefore, it is important to check the copyright status of a work in the country in which you intend to use it.

For example, if you wanted to secure the movie rights for a Japanese horror film that you intend to make in the US, you would need to contact whomever currently owns the movie rights for the original film in US territories.

Occasionally, a very popular work will be released into the public domain, such as The Great Gatsby or Winnie-the-Pooh. Regularly checking what is entering the public domain can give you a head start on securing an original take on such projects. Here are a few resources to do so:

Use a public domain search engine. These search engines will allow you to search for works that are in the public domain. Some popular public domain search engines include the Library of Congress, Public Domain Movies, and the Public Domain Review.

Check the copyright status of a work. You can check the copyright status of a work by searching the United States Copyright Office.

Researching newer IP

The first thing to know is that option agreements for big publishing houses, video game studios, etc. are often negotiated months before the material’s actual release date. So if God of War caught your eye, know that you might be too late.

However, it never hurts to check – especially if the publisher or owner of the material is a boutique or independent distributor. A few methods for looking up work that is not available in the public domain: 

Sign up for IMDbPro. Signing up for IMDbPro allows you to easily research all entities involved with the property and also provides contact information for further research if it’s unclear who owns the work. 

Consult with your representation. Your reps (or any contacts you might have in representation) can be a great resource in locating who owns more recent IP you are interested in developing. Larger agencies and management companies usually have entire positions dedicated to this type of research. 

Researching original material

Looking to option film rights for original material? Script services, contests, and fellowships such as the below promote the scripts of up-and-coming writers who are often open to working with producers on cost-effective option agreements for movie rights. 

Some of the most popular include:

Additionally, you might consider attending the shorts programs at various film festivals. Many lauded features such as Napoleon Dynamite, Saw, and Whiplash started off as short films. 

The nature of festivals also provides a great opportunity to directly connect with creators, and the short itself can serve as a proof-of-concept to potential buyers and financiers. 

Reach out to rights holders

Reaching out to rights holders can take several forms, whether first contact is an email, phone call, or a formal letter. You may also want to reach out through an attorney if the rights holder is a company or notable person. A few more tips in making contact: 

Do your research. Before you contact the rights holder, be sure to do your research and understand the IP that you are interested in. This will help ‌frame your communication in a way that is respectful and professional. Also, research if you have any mutual connections and inquire if they would be willing to introduce you. 

Convey your passion. What do you love about this material? Why are you the correct person to bring it to the market? Conveying this to the rights holder is‌ the most important component of your outreach effort. 

Take the time to write something thoughtful and memorable about your connection to the material. You might also create a pitch deck that represents the tone and style of how you intend to adapt the work, as well as the team behind the project.  

Be clear about usage and intent. When you reach out to the rights holder, be clear about your intentions. Are you interested in optioning the IP, or in buying it outright? What medium would you be looking to adapt the material into? (For example, looking to option the movie rights.)

What do you believe to be a reasonable time frame to try and move the project forward? Be sure to state your intentions clearly so that the rights holder understands what you are looking for and your plans for the material.

Don’t presume. Remember that the rights holder may be protective of their IP, particularly if they are a writer, creator, or a family member. Be sure to be not only respectful of their time and their property, but also their perspective on how you would handle adapting the material. 

Be professional. Be polite, clear, and concise in your communication. If the rights holder prefers, route initial communication through an attorney. 

Know when to consult an attorney 

When you are unsure whether a work is in the public domain. There are some strange edge cases out there (such as the aforementioned Sherlock Holmes for a while). If you have the funds, retaining a good attorney will help you understand the copyright status of a work and help you secure movie rights.

If you are unable to find out who owns the IP or movie rights. An attorney can help you track down the copyright holder and advise you on next steps.

When negotiating the option agreement. A simple Google search will net you several dollar option agreements. Indie producers looking to inexpensively secure movie rights generally use these types of contracts.   

However, it’s highly suggested you consult an entertainment attorney to draft the agreement and ensure everything is above board to move forward with your project. 

Additional opportunities

Here are some additional avenues to explore in securing IP for your projects:

News articles 

Many ‘ripped from headlines’ films started as newspaper articles, including Hustlers, The Bling Ring, and Dallas Buyers Club

The rights holder in this case is usually the newspaper, magazine, or general publisher of the material. For the most part, it’s fairly easy to find the correct contact information via the publisher’s website. 

Life stories

Obtaining a life rights agreement (also called a story agreement) is a special permission that allows you to use a person’s likeness, characteristics, and experiences for creative work. 

It will be important early on to negotiate the medium and scope of work, compensation, and the duration of said movie rights. Contractually, this is one of the more complicated types of movie rights. You should always contact an attorney prior to reaching out to anyone regarding this type of option agreement. 

Student option agreements

If you are currently enrolled in school, there are many low-cost options agreements granted under student agreements. The most famous example is probably Stephen King’s Dollar Baby program, which allows filmmakers to use specific Stephen King works for, you guessed it, one dollar. Notable program alumni include Peter Sullivan and Frank Darabont.

If asked, many other notable creators will also option short stories and other material under student option terms. It’s important, however, to review the terms of any student option agreement so you are aware if you are the movie rights holder of the ensuing material created, or if it belongs to your school. 

Wrapping up

Optioning material can feel like a wild goose chase, but it’s often an interesting and rewarding endeavor. While the above is an overview of the process, it’s always important to consult with an attorney regarding optioning any material to safeguard your finances, time, and resources. 

Before you exercise your option agreement and get into production, consider these additional articles on how Wrapbook can assist in streamlining the process including completing crew paperwork, production insurance, and working with your line producer to stay on budget.

Free Resource

Production Option Template

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Disclaimer

At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice.  You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.

About the author
Daniela Bailes

Daniela Bailes is a working film and television writer whose work travels across genres. A proud alumnus of the Yale Writer’s Conference in New Haven, she was mentored by literary luminaries before being selected for the National Hispanic Media Coalition TV Writer’s Program, a feature writer on the Latinx Black List, and as a participant in the Sundance Episodic Lab. Her most recent work was staffing on the upcoming Paramount science-fiction series, The Shift, also selling a feature script to A+E Networks.

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