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Floors (Entertainment Law): Key Insights into Box Office Revenue Agreements
Definition & Meaning
In the context of entertainment law, "floors" refer to the minimum percentage of box office receipts that a distributor is entitled to receive from a film's earnings. This percentage is established in distributor/exhibitor agreements and ensures that distributors are compensated for their investment in the film, regardless of the theater's operational costs. Typically, the percentage, known as the "floor," decreases over the course of a film's run in theaters, starting at a higher rate and declining weekly. Floors usually range from seventy percent to twenty-five percent, depending on the terms negotiated in the agreement.
Table of content
Legal Use & context
Floors are primarily used in the negotiation and drafting of distributor/exhibitor agreements within the entertainment industry. These legal contracts outline the financial relationship between film distributors and theaters. Understanding floors is crucial for both parties to ensure fair compensation and to manage expectations regarding revenue sharing. Users can manage these agreements using legal templates provided by services like US Legal Forms, which can help streamline the process and ensure compliance with legal standards.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A film distributor negotiates a floor of seventy percent for the first two weeks of a movie's release. After that, the floor decreases to fifty percent for the next two weeks, and then to thirty percent for the remaining weeks in theaters.
Example 2: A smaller independent film might start with a higher floor of sixty percent to attract theaters, but as the weeks progress, the floor could drop to twenty-five percent to encourage theaters to continue showing the film. (hypothetical example)
State-by-state differences
Examples of state differences (not exhaustive):
State
Typical Floor Range
California
70% - 25%
New York
75% - 30%
Texas
65% - 20%
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Difference
Ceiling
The maximum percentage of box office receipts a distributor can receive.
Floors guarantee a minimum, while ceilings set a maximum limit.
Revenue Share
The overall split of box office receipts between distributor and exhibitor.
Floors are a specific component of revenue sharing agreements.
Common misunderstandings
What to do if this term applies to you
If you are involved in negotiating a distributor/exhibitor agreement, it's essential to understand the implications of floors. Consider using legal templates from US Legal Forms to draft your agreement effectively. If the negotiation becomes complex or if you have specific concerns, consulting a legal professional is advisable to ensure your interests are protected.
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