A short intro to Freeway’s services
Are you familiar with Freeway? Freeway provides Collection Account Management, Residual Payroll, Escrow, Data Management, and Production Accounting. All services built around our deep understanding of the challenges faced by parties in the film and TV industry with the production, financing, and distribution of their projects and designed to address key needs for security, transparency, and impartiality. Like when it comes to reporting and handling a production’s sales revenues making sure that all stakeholders receive their correct revenue shares and participations, on time. Or helping clients use sophisticated rights and contract management systems to make the best-informed decisions on the optimal exploitation of their IP and entertainment assets.
Our mission is to help filmmakers, and their collaborators get financial peace of mind.
Benefits of Freeway’s Collection Account Management service
As trusted third party collection account manager, we administer your production’s revenues and make sure that all stakeholders and revenue participants receive completely transparent reporting about sales made, royalties received, and revenue shares allocated in accordance with the agreed recoupment schedule or waterfall. Via Freeway Reporting, our online portal, producers, sales agents, and financiers can conveniently follow the exploitation of their projects 24/7. Transparency is the keyword here. With over 25 years of experience as CAM, Freeway professionals guide clients through the entire process from drafting the CAM agreement, to formulating clear and correct recoupment schedules, to the monitoring of sales and receipts with the sales agents, issuing periodic statements at agreed intervals, and finally releasing entitlements from the collection account. Making sure everyone gets paid correctly and on time.
Benefits of a Collection Account for Investors
A Collection Account is an important tool for producers to protect their investors’ interest in an independent production’s revenues. Although the possibility to recoup an equity investment ultimately depends on the level of sales generated by domestic and international distribution, with a Collection Account, one can make sure that if there are sufficient revenues, the investor gets its correct share, on time. None of the parties of interest, like the producers, sales agent, or others, control the revenues, as this is exclusively in the hands of the neutral, third-party CAM. The benefit for the investors is that they receive transparent reporting about the project’s sales and exploitation and get paid directly by the CAM from funds received in the Collection Account, in accordance with the agreed waterfall. None of the revenues needed to recoup an investor flow through any sales agent, production company or SPV, before reaching the investor.
Working with a Sales Agent and a CAM
Engaging a Sales Agent can be of great value if you are looking to sell your production internationally. Sales Agents know the market well and have important relationships with buyers. The right Sales Agent can help your project reach its full commercial potential.
If you plan to appoint a Collection Account Manager (CAM), it is wise to set up the Collection Account before the selling starts. Then the Sales Agent can instruct buyers to pay their license fees directly into the Collection Account and the CAM takes care of paying the Sales Agent’s commission and expenses from such receipts. As sales fees and expenses are generally calculated on total receipts, they are not reduced by any CAM’s remuneration or expenses. At the same time, the producer and all other parties to the CAMA will enjoy complete transparency regarding the sales, exploitation, and receipts, knowing that all monies are safely held in the Collection Account and diligently managed Freeway.
The Waterfall Explained
The recoupment schedule, also known as the waterfall outlines how a film’s revenues are distributed among producers, sales agents, financiers, unions, talent, and other back-end participants. A clear and accurately formulated waterfall is crucial for independent film productions, as it determines who gets paid, when, and how much, once the film starts earning revenues from international distribution. Preparing and managing waterfalls is at the core of what we do at Freeway: based on the waterfall, we allocate and disburse the revenues amongst the film’s stakeholders, to make sure that everyone receives their correct revenue share, on time.
Paying US Guilds Residuals through a Collection Account
A Collection Account is essential if Residuals are due to members of SAG-AFTRA, the DGA or the WGA. Residuals are additional compensations for actors, directors and screenwriters in connection with the exploitation of the film beyond the initial theatrical window. Under the Basic Agreements in the US, Residuals are payable to everyone who is a member of the above mentioned Guilds. One of the benefits for Independent Producers of setting up a Collection Account with Freeway is that this will allow Residuals to be payable from revenues rather than up-front, out-of-pocket. This way, a Collection Account reduces the financial burden for Producers and supports the Production with complying with obligations vis-à-vis the Guild members. Check out the video if you want to learn more about how payment of US Guild Residuals via a Collection Account works!
Reporting under the DSM Directive
The DSM Directive or often also called Copyright Directive is a European Union directive from 2019, which stipulates that authors and performers should regularly receive information on the exploitation of their works and performances. The information must include the project’s exploitation methods, all income generated, and the corresponding remuneration. The obligation to report is with the production company as rightsholder. To help filmmakers fulfil their obligations under the directive without having to struggle with different spreadsheets with waterfalls and complex formulas for each individual production, we have built Blockframes, an intuitive Do It Yourself waterfall building and reporting tool. Blockframes makes it easy to create standardized, user-friendly waterfalls and generate reports for authors and performers. Watch this video if you want to get familiar with the DSM Directive and the affordable reporting solutions Blockframes offers!