By: Denise Gilmartin, VP, Business Affairs, AICP
If you’re working outside the U.S. and subcontracting a foreign production services company (“FPSC”) for production services, the FPSC typically pays the local and/or non-SAG talent. If the talent is included in the FPSC’s overall budget (and therefore your budget), then you have placed your company between the agency/advertiser, which is ultimately responsible for paying the talent, and the FPSC, which is the employer of the talent and manages the talent payments and contracts. By acting as the middleman, you may be able to charge a handling fee on the cost of talent, but is it worth it?
Are you obligated to pay the FPSC for talent prior to receiving funds from the agency or advertiser? Are you responsible for tracking usage or renegotiating talent contracts when the advertiser wants to use the spot(s) outside the agreed-upon usage terms (or already has)? Are you responsible for penalties incurred if the talent is not paid on time?
An alternative would be for the agency to pay the FPSC for talent directly. You would not receive any markup on talent, but you would not (or should not) have any responsibility or liability with respect to current or future talent payments.
In this scenario, the FPSC would be your subcontractor for production and the agency’s subcontractor for talent. However, some agencies may not view it that way. Therefore, if the agency is paying the FPSC directly for talent, you should clarify this relationship in your production agreement with the agency by using language such as the following:
For the avoidance of doubt, if and to the extent the Foreign Production Services Company (“FPSC”) has handled, is handling, and/or handles any talent payment matters directly with, on behalf of, and/or for the Advertiser and/or Agency, Agency and Advertiser expressly acknowledge and agree that the FPSC is not Production Company’s subcontractor in such matters, and Production Company does not have and will not have any responsibility or liability in connection therewith.
If you have any questions regarding this article, or any other business affairs issue, please contact me at deniseg@aicp.com.
This information is designed as a service to AICP Members and is intended only to provide general information on the subject covered and not as a comprehensive or exhaustive treatment of that subject, legal advice, or a legal opinion. Members are advised to consult with legal counsel and other professionals with respect to the application of the subject covered to any specific production or other factual situation. Use by a company of any of the options and provisions discussed herein are matters of individual company decision in accordance with its own business needs and nothing contained herein is intended to suggest agreement among AICP members or the adoption by the AICP of a uniform position concerning the content of this article.