Recoupment
From ForcaWiki, the simple encyclopedia
| In one sentence | A distributor's right to get back the money it advanced before it has to start paying out any extra overages. |
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| Category | Film and Television |
| Related | Advance, Overage, Distributor |
Imagine you lend a friend money to start a small business, and you both agree that you get every dollar you lent back first, before your friend starts handing you any extra share of the profits on top.
Recoupment is that same right for a movie distributor. It is the right of a Distributor to fully recoup, meaning get back, any Advance it already paid out, before it has to start paying overages on top of that.
Fun facts
- Recoupment is a big reason advances are considered less risky than a pure profit share: the distributor gets first claim on early earnings until they are made whole.
- A movie can earn enough to fully recoup a distributor's advance and still never generate any overages at all, if it does not earn much more than that.
- Whether a distributor has fully recouped yet is one of the first things checked before any extra money starts flowing to anyone else.