The TRUTH About Minimum Guarantees Every Filmmaker Needs to Know

So you’ve just completed your film and want to sell it. Let’s say it is a horror film, and you’re super proud. Many people tell you to hold off on distribution deals unless you get a significant minimum guarantee. And your first question is, “What the heck is a minimum guarantee?”

Often called an MG, a minimum guarantee is a payment for your film against the profits. A distributor or sales agent pays you X amount of dollars (usually in the form of an upfront cash advance). Then they eventually recoup this payment from future revenues on the picture.


How To Get A Minimum Guarantee

Now you think, “How do I get an MG? And how much will a distributor pay me?”  Those are both great questions. To start with the bad news, MGs used to be much higher. In the Blockbuster Video (DVD) days, minimum guarantees could be several million dollars for even mediocre horror films with C list cast. But that all changed with the evolution of video-on-demand.

Unless you have a movie with an A-list, sellable cast, the odds of a big payday are slim these days. If you’re fortunate enough to get an MG offer on your film, it will probably only be a few thousand. And anything above five figures is scarce. And even the movie getting million-dollar payouts probably cost $10-15 million to make. So it’s perhaps not a total win for those filmmakers either. And that’s always the problem.

The bottom line is that getting an MG should not be the deciding factor in signing with a distributor or sales agent. And here’s why. First, it’s very tough for sales agents to predict who will buy films. If they commit a minimum guarantee of $100k, they MUST be sure the film will make more than that because legitimate expenses are involved. And what if the film doesn’t make back the money paid in an MG? One too many of those deals, and the sales agent is out of business.

Don’t Just Focus On Your MG

The decision should come from the reputation of the sales agents and how you feel they will handle your film. Do they return your emails promptly? Can you get them on the phone? What do other Producers say about them as a company? These should be questions you’re asking yourself and also asking others.

Don’t limit your film by saying, “I will only accept a $100k minimum guarantee.”  A horror filmmaker approached me once in a movie where he said those exact words. Our offer was more in the 10k range to show we had skin in the game. I told him, “No problem. Shop it, and come back if you don’t get that.”  He came back about one year later. The film was older, less fresh, and a harder sell.

So be pragmatic and realistic about your goals. Remove the thought that you must get an MG. My most successful business relationships have come with distributors who paid $0 upfront but worked hard for the film. And if you’re interested in learning more about film distribution, check out my film distribution training.

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Tom Malloy is a film producer, actor, and writer. Over the course of his career, he has raised over twenty-five million dollars to produce, and distribute multiple feature films. If you're ready to "level up" your film producing, make sure to check out Movie Plan Pro. The video training and downloadable film business plan template will provide you with the same tools Malloy uses when approaching prospective film investors.