If you’re like most screenwriters, the scenario you’re working towards, aside from on outright purchase of your spec script, is getting an option agreement. An option agreement is a deal that essentially ‘loans out’ or ‘rents’ the rights to your script to a producer or production company in hopes they can get the movie made.
The idea of an option agreement seems great. It is a low risk opportunity where well connected pros get to pitch and promote your screenplay and handle all that intimidating business stuff.
The Screenwriters Guide to Option Agreements
There are a few catches and red flags you need to be aware of before optioning your script over to anyone.
1. What Happens If….??
It’s vital to understand that an option agreement does not guarantee your script will be adapted into a feature-length movie. Assuming the project is well received, it could be completely reworked into a series, pilot, short or other radically different re-tweaking of your ideas. And this is assuming a project is ever actually adapted from your work…
It’s important to remember, there is no guarantee your script will go anywhere! Your script might not get the financing or attention it deserves, meaning it never gets adapted into anything.
Doesn’t an option agreement mean that a producer or production company wants to produce the script into a film? And won’t they be incentivized to go around Hollywood and present it to other professionals in order to secure money?
Sure. It can mean this. But sometimes option agreements are signed so that a producer or production company can showcase your work to only one or two targeted parties. And if those targeted parties pass, then you script sits in a file cabinet until the term of your option expires (and that can range from one year up to five… or more).
2. Show Me the Money
Since producers and production companies are ‘borrowing’ your script rather than purchasing it, they will always try to gain access to your work. These folks will either offer you a very small upfront payment or a revenue share. A revenue share is a percentage of future monies (assuming the whole project moves forward), which means you’re giving away all rights to your script for free with the hope something sticks…
Both scenarios allow producers and production companies to stretch their own budgets to acquire more scripts, affording them more opportunities for something to stick… This is great for their bottom line, but it doesn’t guarantee you much of anything.
Remember, this is only phase one… There are always those positive scenarios of what happens after your spec script is produced, greenlit or sold to yet another party. Granted, these could be good problems to have, but ones most newbie screenwriters don’t fully think through before signing on the dotted line.
When presented with an option agreement, make sure you’re getting ‘something’ up front for your loan-out of your intellectual property. If you are not paid in money, at the minimum you need a clear understanding of the overall strategy and how you’ll be compensated during each phase.
3. Re-Write, Re-Write, Re-Write
A big problem many newbie writers have after signing an option agreement is not realizing they’re sometimes guaranteeing the producer or production company a lot of free excess work….
Many screenwriters have gotten caught in endless loops of re-writing their scripts for a second or third time to satisfy the interests of optioning production companies and producers. In addition to all this free writing, if the writer had not complied, he would have been required to return the initial down payment the optioning party paid plus damages!
Don’t let this horror story scare you. Although an option agreement will always be heavily sided towards the party offering them, that does not mean they’re not valuable. As with any agreement, you need to be very cautious when reviewing. Get a lawyer. And make sure you’re fully aware of what contributions—if any—you might be required to make.
4. Sequels, Prequels and Nearquels
You might be thinking you’re only loaning out those rights limited to your single spec script, but nearly all option agreements will add additional clauses. These often include direct sequels and prequels related to your work, as well as ‘nearquels’ which extend across other hypothetical platforms, including stage play adaptations, book adaptations, reboots and more.
This is not a deal breaker. In fact it’s very common. But there are many ways you need to review this language carefully to get a full sense of what you’re handing over as well as what you’ll be getting back once the option period has expired.
In the event your option agreement expires, and no movie gets produced from your work, you still need to make sure all those sequel, prequel and nearquel rights revert back before you promote your returned script again. It has happened before where the original property is returned to a writer, but the sequel, prequel and nearquel rights stay with a production company.
5. When Nothing Happens
If no film is produced adapted from your script during the term of your option agreement, the deal expires and the rights get returned to you. This is the real selling point most producers and production companies use to push an ‘option’ on you instead of a purchase.
After the term is up and the rights are returned, you might not have full transparency about how your work was handled while it was on loan. For example, was is shown only to one or two parties, or was it copy and pasted all over Hollywood? Did any parties have an interest? And if so, how far did the conversation go? What prevented them from continuing?
In short, if no film is adapted from your script, you will get the rights back… But you might not have a real world sense of how valuable they really are after your work’s been exploited by a third party.
If you are presented with the opportunity to option, make sure you slow down and truly think through the long term of your project. Ask yourself (and the party interested) a few ‘what if’ questions. And always make sure you get transparency to how these entities will handle your work. If you’re not comfortable with the answers, maybe signing an option agreement isn’t the right move just yet.
Landing your first option agreement is a major milestone towards building a real screenwriting career. You should be proud for reaching that goal. But as with all agreements in Hollywood, they never come ‘ready-to-go’ and there is never a ‘one-size-fits-all’ boilerplate.
You will need to review your option agreement carefully, understand what rights you’re granting and how the deal will work. Consult a close friend who understands such matters, or you can always hire the one-time services of a Lawyer.
In my book, Writing for the Green Light, I take a full sample option agreement and break it down page-by-page (line-by-line) and explain how each step of the process works. This way you will know what red flags to look for and how to make sure you, and your work, are protected.