7 Things to Look For in a Distribution Contract Before You Sign

Before you sign a distribution contract, you're trading years of control and revenue for access to a distributor's network. You need to know exactly what you're giving up and what you're getting back. This guide walks through seven critical clauses, a real-world example, and common questions filmmakers ask before they sign.

When I look at a distribution contract, three things jump out immediately: territories, splits, and term. Is the distributor actually operating in the territories they're taking? How is revenue split, and how are expenses handled? And how long are you locked in? Everything else in the contract flows from those three questions. The sections below break down all seven areas you need to scrutinise before you put pen to paper.

1. Rights, territory, and media

The first thing to understand is exactly which rights you are granting and where they apply. Distribution agreements should spell out territory (e.g., UK, North America, "world") and media/platforms (theatrical, broadcast, TVOD, SVOD, AVOD, DVD/Blu-ray, airlines, educational, and so on).

Territory: Avoid vague terms like "universe." List specific countries or regions -- and make sure the distributor actually operates there. Signing over rights to a territory the distributor has no real presence in means locking yourself out of a market they will never sell into.

Media/platforms: Only include the formats the distributor will genuinely exploit. Don't give away educational or airline rights if they have no track record there.

Exclusivity: Clarify whether the distributor's rights are exclusive or non-exclusive, and whether you can carve out certain territories or windows you want to keep.

Some contract templates emphasise that territory and exclusive rights should be specified clearly so both parties know exactly where and how the film may be exploited.

2. Term length and reversion of rights

The "term" is how long the distributor controls your film, and it's one of the most important deal points. Many indie-focused lawyers and filmmaker resources warn against "perpetuity" clauses.

Term length: Five years is often cited as typical. Twenty-five-year or perpetual terms are considered too long for most indie deals. In practice, negotiating a term of 10-15 years is a realistic target for broader multi-territory agreements.

Automatic renewals: Watch for clauses where a "5-year term" automatically renews for another five years unless the distributor opts out. This can double the effective term unless you negotiate limits upfront.

Reversion clause: Include language that rights revert to you if the distributor fails to meet obligations -- no release by a certain date, failure to pay, or if the company closes or becomes insolvent.

You want a partner who will actively work your film during a defined term, not one who owns it indefinitely with no performance obligations.

3. Fees, revenue split, and "gross vs net"

How money is defined and split determines whether you ever see profits. Distribution agreements usually give the distributor a sales fee (their commission) and allow them to recoup expenses before paying the producer.

Sales fee percentage: Scrutinise whether fees are reasonable for the services promised. High fees can wipe out your share even if the film performs well.

Gross vs net: Make sure "gross receipts" and "net profits" are clearly defined. Vague "net" definitions can hide substantial deductions in the distributor's favour.

Cross-collateralisation: Some deals bundle your film with a slate of titles, so your revenues are used to cover other films' losses. This can delay or eliminate your profit entirely. Avoid it if you can.

Term length, fee percentage, and capped expenses are the three numbers that most affect long-run revenue for the producer.

4. Marketing, expenses, and caps

Distributors often recoup marketing and delivery expenses before sharing revenue. Uncapped costs can leave your film in perpetual "unrecouped" status -- and this is where deals go quietly wrong.

Here's a real scenario: a filmmaker generates £100,000 in revenue, then receives a statement showing the distributor spent £120,000 on marketing. The film is now in the negative. The problem is usually that those costs weren't clearly defined or understood upfront. In some cases, the filmmaker was already doing much of the marketing themselves, which makes it even harder to justify the expense line. If those numbers aren't laid out precisely in the contract -- or if the distributor is hesitant to itemise them -- treat that as a warning sign.

What counts as an expense: Ask for a defined list (e.g., P&A, deliverables, platform fees) and push back on vague "other costs."

Caps and approvals: Negotiate hard caps on marketing and distribution expenses, and require written approval for any spend above a set threshold.

Recoupment waterfall: The contract should clearly state the order: gross receipts, then deducted expenses up to agreed caps, then distributor fee, then your share.

Without clear caps and definitions, open-ended costs can consume all incoming revenue before you see a penny.

5. Deliverables and technical requirements

"Delivery" is more than handing over a ProRes file. Modern distribution contracts list detailed technical and legal materials the producer must supply before any minimum guarantee is paid or release proceeds. These can include specific codecs, M&E tracks, captions, artwork, E&O insurance, QC reports, chain-of-title documents, and guild/union paperwork.

Detailed deliverables schedule: Reputable contracts spell out required formats, approvals, and standards so you can budget time and money for them.

Cost and logistics: Misunderstandings around deliverables -- who provides and pays for specific formats -- are a common source of disputes.

Payment triggers: Minimum guarantees and some fees are only payable once all deliverables are accepted. Failing to meet the required standards can delay or deny payment entirely.

Treat deliverables as a core production cost, not an optional extra.

6. Accounting, reporting, audit, and termination

Even a fair split is meaningless if you can't see the numbers or enforce the contract.

Reporting frequency: Many experts recommend quarterly statements at minimum, or monthly around initial release windows, so you can track sales and spot problems early.

Audit rights: Contracts should allow you or your accountant to audit the distributor's books relating to your film. This is standard practice, not a sign of distrust.

Termination and remedies: Clear termination language -- specifying breaches, notice periods, and what happens to materials and money on termination -- is critical when things go wrong.

Disputes where under-reporting or failure to account have led to damages or reversion of rights are well-documented. Strong reporting and audit clauses are what make those outcomes possible.

7. Sub-distributors, assignment, and company failure

Your contract might allow the main distributor to appoint sub-distributors or assign rights to other entities. When distributors fail or sell, filmmakers can be left in limbo with no clear route to reclaim their film.

Sub-distributor approval: Specify whether the distributor can appoint sub-distributors freely or only with your consent, and whether you're entitled to statements showing what sub-distributors earn.

Assignment and change of control: Include language covering what happens if the distributor is sold, goes bankrupt, or ceases trading. Rights should revert to you in those scenarios.

Return of materials: Disputes have turned on whether the distributor must promptly return masters and remaining stock upon termination. Get this in writing before you sign.

Plan for exit scenarios before you sign -- not after something goes wrong.

Snapshot: 7 key things to check

Area What to confirm Rights, territory, media Specific territories, media, and exclusivity. No vague "universe." Term and reversion Reasonable term, no perpetual lock-ups, clear reversion triggers. Fees and revenue definition Transparent fee %, clear gross/net definitions, no cross-collateralisation. Expenses and caps Defined recoupable costs, hard caps, and approval rights. Deliverables Detailed list of technical/legal materials and payment triggers. Accounting and audit Regular statements, audit rights, and clear termination remedies. Sub-distributors and failure Control over sub-distributors, assignment, and return of materials.

A real-world example

Consider a documentary producer who signs a worldwide, 15-year distribution deal that looks attractive on the surface -- festival exposure and multiple platform releases promised. The contract gives the distributor exclusive rights worldwide across all media, a sales fee of 30 percent, and uncapped marketing and "overhead" expenses recouped from gross receipts.

Over the following years, the film is released on several VOD platforms. But the producer receives minimal statements showing that "expenses" have swallowed all revenue and the film remains unrecouped. When the distributor restructures and sells its brand, the obligations to pay back revenue become unclear. The producer can't collect earnings or retrieve masters to move to a new partner.

If the original contract had included tight expense caps, regular accounting with audit rights, and a reversion clause triggered by non-payment or company failure, the producer would have been in a far stronger position to terminate and reclaim the film.

Common questions

Q1: What is a "reasonable" term for an indie film distribution contract? Many practitioner sources suggest 5-10 years is a common range, with up to 15 years sometimes justified for broad multi-territory deals. Very long or perpetual terms are red flags unless balanced by exceptional guarantees and performance obligations.

Q2: Should I ever agree to "worldwide, all media" rights? It can make sense if the distributor truly has global reach and will exploit multiple platforms -- but verify they can deliver on that. Carve out territories, windows, or niche rights (such as educational or airline) if the distributor has no track record there.

Q3: How often should I receive statements and payments? At least quarterly is the common recommendation. Some contracts provide for more frequent reporting around initial release windows, but monthly or quarterly is the standard benchmark.

Q4: Do I really need an audit clause if I trust the distributor? Audit rights are standard business practice, not a sign of distrust. Documented disputes show that under-reporting and failure to deliver accurate accounts have led courts to award damages -- and those outcomes depended on enforceable contractual obligations.

Q5: Can I negotiate expense caps and fee percentages? Many distributors treat terms as standard, but if they genuinely want your film, there is usually room to move on fee percentages, caps, or territories. Always push back on broad, open-ended cost language.

Q6: What should happen if the distributor fails to release the film? Include a performance clause stating that if the distributor does not release the film in certain media or territories by a specific deadline, you can terminate and reclaim rights. Without it, you may be stuck in a long-term deal with no active exploitation.

Q7: Do I need a lawyer, or can I rely on templates and online advice? Use AI as your first filter, but not your final safeguard. Before spending money on a lawyer, run the contract through a large language model and ask it to flag risks or unclear clauses. It's surprisingly effective at surfacing areas you should question. Then, if it's a serious deal, bring in an entertainment lawyer for a proper review. That combination -- AI for initial scrutiny, legal expertise for final review -- is probably the most practical approach for new filmmakers today. Template agreements and educational articles are useful for understanding the issues, but general guidance is not a substitute for professional legal advice on a specific deal.