Option Deals -

When a company commits to bringing your story, script, or concept to market, they will propose an option agreement that gives them the exclusive right to sell your show to a studio for a limited period of time. Having a script, book or personal life story-rights gives production companies more leverage and substance during the development and sales process, and as a result they are typically willing to pay more up front when optioning these types of properties. Even a treatment written as an outline for a movie will bring more to the table because it is usually regarded as being more substantial than a basic "idea" that can be interpreted in very loose forms.

Option deals for concepts are essentially the same as for completed screenplays, but fees and purchase prices are considerably larger for selling a screenplay. Financial participation as well as participation in the development and production is negotiable to a point depending on your experience within the industry and what you bring to the table in terms of the marketing of your script.

As in any industry, there are a variety of forces and factors that give shape to the legal structure and content of any deal made. A Screenwriter or Producer who has an established track record is likely to receive a more lucrative deal than someone with little or no experience, and most often will be given more involvement in the actual production of the show. However, there are industry standards regardless of who you are.

The following is a conservative outline of what should be in an industry standard deal from a production company making you an offer: 

[Disclaimer: This is in no way given to you as legal advice or guarantee of what may or may not be offered to you by any company or person you engage in negotiations with. We strongly advise that you have an entertainment attorney negotiate any offer made to you, as there are many variables and strategies for securing the best possible deal.]

Option money:    This is an upfront payment made to you by the company who wants to produce your film. It is token money, and usually ranges from $500 up to appx. $10,000. It is non-refundable to the company who pays it to you simply to retain the exclusive right to further develop and sell your show to a studio. Some writers will agree to a free option simply to benefit from the opportunity of a top production company shopping their project, and to improve their resume' as a screenwriter. Most production companies will have no problem offering a nominal amount of money upfront.  At the end of the option period, the company will sometimes have an option to extend, which entails paying you a bit more for the extra time they are requesting to retain your project. 

If the production company does not sell your project to a studio then the project returns to you, the screenwriter and owner. You can continue to shop your script or concept to other companies. Many writers have had scripts that have never made it to production, but have made a significant amount of cash off of repetitive options. If the company does sell your show, then you will be paid a "Purchase Price" that will have been pre-negotiated.

Purchase Price (or Set Up Fee):    This is a lump payment to you, the creator of the concept  and/or owner of the script or property, at the time of the production company "exercising your option". In other words; you are paid this money when the project is sold to a studio. The amount is significant and varies greatly depending upon your negotiations with a buyer. Speculative scripts from new writers may sell for the WGA minimum (appx 30k), while some may actually induce bidding wars that can bring a screenwriter fees well into six figures.  Purchase prices for straight concept sales can still reap significant dollars upwards of a hundred grand. At this point the script or concept no longer belongs to you and is the property of the production company who sold the project, and eventually the studio who puts it into production.

Participation In Profits:    As the creator of a concept or screenplay, it is customary to retain an interest in profits derived from the production and distribution of the film. This is paid to you by the production company through your attorney and is usually a nominal percentage of the fees paid to the production company by the studio distributing the film. Again, the amount of financial participation in this area varies and can often be negotiated as leverage against any purchase price you agree to. Additionally, it is standard practice for your attorney to retain the right to "audit" the accounting of the company paying you to ensure that the percentage of profits you agreed to is the true percentage you are paid. 

On-Screen Credit:      Studios will acknowledge the creator of a story concept or screenplay produced, usually with a "Story by" or "Screenplay by" credit. You may also be able to negotiate a producer credit relative to your actual participation in the development and production of the film.