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Legal Eagle

Overseas

Q: Franchising a musical in another country

How can I franchise a musical in a foreign country?

A: By "franchise" I assume you mean where an original producer ("OP"), usually though, not necessarily of a successful, big-budget, long-running, West End blockbuster stage-musical, licenses one or more foreign producer(s) ("FL"), to present in their respective overseas territories, possibly in a foreign language, a copycat "repro" of OP's original production, using the same stage directions, choreography and designs as the original. This is a big subject and all I can do in the space available here is set out a few general principles.

First and foremost it is necessary for OP to clear the rights in terms of copyright. If he is wise and well advised he will have covered this in his pre-existing contracts with author, composer and creative team, to ensure that he has the necessary "repro" rights, and can sublicense them. It is possible to do so ad hoc on a production by production basis, but this will be worse for OP because, not only will it be time consuming and expensive, with no guarantee of a successful outcome, but the original rights owners may seek to hold him to ransom on contract terms on the back of the success of his original production. Either way, he may find he has to pay the author/composer substantial non-returnable advances against royalties for each new option-territory, though such advances are usually recoupable from royalties.

OP should check the credentials of FL carefully to ensure that FL has the necessary corporate or other legal status, expertise, resources and financial muscle to undertake and carry out the project successfully. Usually OL will be a foreign corporation which may be a newly created subsidiary of a larger parent company, so that guarantee(s) will be a sensible requirement.

The advantage of this kind of deal for OP is that OP gets a lucrative share of the gross box office, even if the repro does not go into profit, and also considerable credit and publicity, but runs no financial risk other than the insolvency of FL and any guarantor(s). It is different from a copycat co-production, in which OP and FL are partners and share the risk together with their investors.

OP will need to work out a royalty structure and an appropriate "advance" to charge FL, which will reflect both the royalties OP has contracted to pay third parties and also an additional licenser's royalty for itself (3% of NWBOR would not be unusual for the latter, sometimes with a profit share, and sometimes with escalation at "recoupment").

The key to artistic success of the repro is for OP to place FL under a contractual obligation to engage the same creative team (director, choreographer and designers of sets, costumes, lighting and sound) as the original production, or, if they are unwilling to be so engaged, then deputies for them nominated by OP, and for OP to reserve a prior right of approval (perhaps not to be unreasonably withheld) of the local production team and of a range of other matters, such as the repro-budget, the theatre, the cast, the translator and translation (if any), the musical director, the orchestrations (if other than the original), any local production website and so on. The original creative team will probably, in any event, have required options to be engaged for any repro of their work, so that nominated deputies to oversee the same will only be needed if they fail to take up their respective options. In effect, OP is able in this way to exercise full artistic control over OL's repro.

OP should also insist on FL using only OP's original logo and artwork in all publicity material of the repro (including posters and programmes), which will help to create an instantly recognisable worldwide livery for both the original production and all subsequent repros. Further OP should stipulate precisely the billing credits to be given to itself and the author/composer and original creative team in all such material (and also programme biogs), which will need to comply with OP's own contractual obligations to third parties.

Strict accounting procedures as between FL and OP will need to be imposed, and OP will probably require FL to pay royalties direct at specified intervals to the various royalty participants involved. OP should also reserve a right to inspect and verify the relevant FL production accounts.

There will need to be provision for local merchandising (using OP's logo and artwork) and possibly a local cast album and video, all under strict contractual conditions, but filming without OP's consent should be prohibited. Royalties will be payable by FL to OP for all these subsidiary rights, of course.

I could go on and on about minor points which need to be covered, but you will by now have got the drift. All this needs extensive and careful legal drafting, and it would not be unusual for the Repro Licence to run to some 50 or more pages with extensive definitions, schedules and appendices. It is obviously desirable to use an experienced legal practitioner in the field, of which there are no more than a handful, since it is an area of legal practice not visited very often. SOLT will be able to recommend someone if required.

It is a formidable project which should not be undertaken lightly. Certain well known commercial producers have honed the technique over a period of many years' experience. There are many traps for the unwary, so do take care and seek expert guidance if you embark on it.

First published March 2007