# Distribution Agreement

Source: https://storiara.com/glossary/distribution-agreement
Last updated: 2026-09-14
Author: Charles Hirschhorn, Storiara

> A distribution agreement is the contract that grants a distributor the right to release a film in specific territories and media for a set term. It spells out the minimum guarantee or license fee, the distributor's fee, which marketing expenses it can recoup and up to what cap, how often it reports, and what the producer must deliver before payment.

## The terms that matter

Most distribution agreements run 20 or more pages, but the money sits in a short list of deal points. Here is how they might read for a US license of THE LONG DRIVE, with every figure an assumption for illustration:

| Deal point | Example |
|---|---|
| Territory | United States and its territories and possessions |
| Media | All media, including theatrical, TVOD, SVOD, AVOD, TV |
| Term | 15 years from delivery |
| Minimum guarantee | $400,000: $40,000 on signing, $360,000 on delivery |
| Distribution fee | 30% of gross receipts |
| Recoupable expenses cap | $250,000 |
| Reporting | Quarterly for 3 years, then semi-annually |
| Audit | Once a year, 30 days' notice |
| Payee | Collection account |

## Following the money through the contract

Say the film earns $1,500,000 in US receipts over the term. The distributor keeps a 30 percent fee ($450,000), recoups $250,000 of marketing expenses, and recoups the $400,000 [minimum guarantee](https://storiara.com/glossary/minimum-guarantee). That leaves $1,500,000 minus $1,100,000, or $400,000 in overages paid to the producer's [collection account](https://storiara.com/glossary/collection-account). The full sequence is covered under [recoupment](https://storiara.com/glossary/recoupment).

Change one clause and the result shifts. If the fee were 35 percent, the fee would be $525,000 and overages would drop to $325,000. If expenses had no cap and came to $400,000, overages would drop to $250,000.

## What producers overlook

The delivery schedule is attached as an exhibit and gets less attention than the fee, but it controls when the MG gets paid. It lists every item the distributor requires: picture masters, [M&E tracks](https://storiara.com/glossary/m-and-e-tracks), closed captions, key art, music cue sheets, chain of title, E&O insurance certificates, and more. Items that weren't budgeted delay payment while bank interest runs. Price the full list under [deliverables](https://storiara.com/glossary/deliverables) before signing.

Media and holdbacks are the second blind spot. Granting "all media" for a low MG can block a separate streaming deal the producer might have made. Holdbacks (periods when one window must stay closed while another runs) can also limit what the [sales agent](https://storiara.com/glossary/sales-agent) can sell in neighboring territories.

Cross-collateralization is the third. If the same distributor takes several territories or several of your films, a clause allowing it to offset losses on one against gains on another delays overages, sometimes indefinitely.

## Where it fits

Distribution agreements signed before production are [pre-sales](https://storiara.com/glossary/pre-sales), and one covering the whole film for a fixed price on delivery can function as a [negative pickup](https://storiara.com/glossary/negative-pickup). Every agreement feeds the producer's [P&L projection](https://storiara.com/blog/the-p-l-projection-predicting-the-success-of-your-film), and your [production accountant](https://storiara.com/roles/production-accountant) or CAM checks each distributor statement against its terms.

## Frequently asked questions

### What is a distribution fee?

The percentage of gross receipts the distributor keeps for its work before recouping expenses and any advance. The rate is negotiated per deal and often differs by media, such as theatrical versus streaming.

### What are audit rights?

A clause letting the producer, usually once a year and at its own cost, send an accountant to check the distributor's books. Many agreements shift the cost of the audit to the distributor if underreporting beyond a set percentage is found.

### How long is a typical distribution term?

It varies with the deal and territory. Longer terms are often traded for a higher minimum guarantee, so producers weigh the MG against getting rights back sooner.

### What happens when the term ends?

The rights revert to the producer (or the sales agent, for resale), subject to sell-off periods for physical goods and any licenses the distributor granted that run past the term.