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Simple English definitions for legal terms
formula deal
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A quick definition of formula deal:
A formula deal is an agreement between a movie distributor and a group of theaters to show a movie in all of their locations. The theaters agree to pay a percentage of the money they make from the movie to the distributor. This helps ensure that the movie will be shown in many different places and can be seen by a lot of people.
A more thorough explanation:
A formula deal is an agreement between a movie distributor and a theater chain, either independent or affiliated, to show a particular movie in all theaters at a set percentage of the national gross receipts earned by the theaters.
For example, a distributor might agree to a formula deal with a theater chain to show their latest blockbuster movie in all of the chain's theaters across the country. The deal might specify that the theaters will receive 50% of the national gross receipts earned by all theaters showing the movie.
This type of deal is beneficial for both the distributor and the theater chain. The distributor is guaranteed a wide release for their movie, while the theater chain is guaranteed a popular movie that will attract audiences and generate revenue.