The commercial production industry, as a service-sector business, provides talent and time to its clientele. The success of individual companies and the industry as a whole can be measured by the effectiveness of selling talent and time to advertising agencies.
The commercial production industry operates in a dynamic, cyclical environment. In order for companies to operate on a sound and consistent footing within this environment, the production industry has developed a set of guidelines that standardize billing procedures, cancellation and postponement policies, and contingency days. The most crucial component in production is clear and specific communication between the production, editorial, post-production company (“the company,” “companies,” “production company,” or “production companies”) and the contracting agency (“the agency” or “agencies”). This, in turn, helps clarify the process with the agency’s client, the entity commissioning the advertisement (“the client”).
These guidelines should help achieve the following objectives:
- A quality end product for agencies and clients.
- Fair market price for the work undertaken.
- A consistent set of rules the company, the agency and the client can rely on.
- Confidence that all parties have access to a set of responsible business practices.
BILLING & PAYMENT PROCEDURES
It is recognized that this is a labour-intensive industry. Accordingly, prompt payment to the production, editorial, and post-production companies for services rendered is essential.
TRANSFER OF OWNERSHIP
The title of ownership of a commercial does not transfer until full payment is made according to payment guidelines. Each production, editorial or post-production company may adopt a payment policy requiring full payment for the commercial prior to its broadcast use. Such a policy is consistent with good faith business practices and is also consistent with provisions used in Great Britain by the Advertising Film and Videotape Producers Association, The Institute of Practitioners in Advertising, and the Incorporated Society of British Advertisers.
GUIDELINES ONLY
As the following are guidelines only, any unusual circumstances requiring other payment arrangements than those listed in this document may be negotiated at the quote stage.
PRODUCTION
PROJECT ENGAGEMENT PROCEDURES
ACCP member companies acknowledge that each project is contract based and in order to secure a contract for production, it is most often necessary to be invited by agencies to engage in a competitive Pitch on a media project or campaign. This Pitch is designed to showcase the production company and its director’s creative expertise and typically consists of the Director’s approach to the execution of the project or campaign (the Treatment), and the financial costs associated with the Director and Production Company’s approach (the Bid). In an effort to recognize and respect the significant time and cost outlay member companies need to prepare the Pitch, and to ensure transparency and fairness in the Pitch process, and finally to encourage responsible best practices in the Pitch process, the ACCP and its member companies have adopted the following project engagement procedures:
1. The ACCP Pitch Engagement Form should be filled out by the engaging agency/client and sent to each company participating in the Pitch, which details, among other things:
a. Project scope;
b. Project status (Scripts approved or not approved);
c. Project schedule;
d. Project deliverables;
e. Project budget;
f. Project personnel;
g. Other Pitch participants (including whether any of those participants are subsidiaries or otherwise financially connected to the agency and/or client );
h. Treatment expectations.
i. In the absence of this form, the preceding information, at minimum, is to be provided to the Pitch participants in written form.
2. Pitch engagement is to be limited to 4 participants or less. All participant company names must be made known to each other. If any participants are subsidiaries or otherwise financially connected to the agency and/or client, that must be made clear at the time the Pitch Engagement Form or project details are shared. If participants fall out of the Pitch, replacement participants may be sought at the discretion of the agency should they wish to maintain a minimum 3-participant Pitch scenario. Any new participant(s) must be made known to the other participants at the time new participant(s) are engaged.
3. Given the ever-escalating scale and cost of creative treatments, ACCP companies and agencies have agreed to make an effort to contain treatments. To achieve this goal, agencies and clients will be clear on their expectations for treatments, ensuring briefs are thoughtful and specific on what they are seeking to achieve. Agencies will also provide project success factors where possible. When bidders are unsuccessful, agencies will offer guided feedback.
4. Treatment costs will be paid to unsuccessful bidders where jobs are cancelled after treatments have been solicited and generated. The cost paid to each production company will be identical, and will default to a minimum of $3,000 unless otherwise specified prior to project start.
5. There will be no treatments for any PSA, regardless of size. Instead, PSAs will begin with an agency briefing to pitch participants along with a set of creative questions for the pitch participants to answer. The pitch participants will address these questions in a follow-up session and repeat those responses in a follow-up email. Reference links can be part of the follow-up discussion and email. The selected Director should create a post-award mini-treatment to help form the creative contract.
6. All treatment requests beyond the norm that originate with the agency will be subject to costs determined prior to pitch engagement and agreed to by bid participants. The intention of this stipulation is to ensure bidders are fully compensated for these atypical requests. Examples include but are not limited to storyboards and pre-vis.
PAYMENT PROCEDURES- THE “75-25” PLAN
The "75-25" plan is applicable in instances of firm bid contracts whose requirements are production through videotape dailies and where editorial and post-production is contracted separately by the agency.
1. First Payment: 75% of the contract price is due upon verbal or written notice of award or signing of the bid/production contract (whichever is sooner). Payment for 1st 75% of the bid/production contract must be received not later than twenty-four (24) hours prior to the commencement of the first filming/shoot day. Since job confirmation is almost always a verbal order, the first payment is due whether or not the Production Company is in receipt of a written contract purchase order or letter of agreement. (This provision serves to reaffirm the fact that a verbal order to commence production signifies that all proper agency and advertiser authorizations have been obtained and that the Production Company is to begin incurring hard costs on the confirmed job.
If 75% has not been received twenty-four (24) hours prior to the first shoot day, the production company reserves the right, at its discretion, to halt production, thereby enacting the postponement terms at the agency/client's expense and/or hold back hard drives until such time as payment has been received.
2. Second Payment: The final 25% of the contract price is due and payable upon approval of digital footage or film videotape dailies, but not later than the airing of the commercial or 30 days from the date of the final invoice, whichever comes first.
If the final 25% payment is not received within 30 days of the final 25% invoice date, a financing charge of 24% per annum compounded weekly after 30 days will be billed on a weekly basis to the agency on all overdue amounts.
3. Overages: In all cases where there are contracting agency/ client-approved overages from the contract price, invoices will follow within 30 days of the final contract billing and are payable within thirty (30) days of the date of invoice.
Payment of approved overage invoice(s) will be due 30 days from receipt of invoice. If payment is not received within 30 days, a financing charge of 24% per annum compounded weekly after 30 days will be billed weekly to the agency on all overdue amounts.
GUIDELINES FOR PRODUCTION POSTPONEMENT & CANCELLATION PROCEDURES
The basis for this ACCP Guideline is to define and set a value for the production, editorial and post-production company’s primary commodity, which is the time and services of its personnel along with equipment and facilities provided by the company. At the same time, the ACCP recognizes that cancellations and/or postponements may occur for a variety of reasons, and its member companies are mindful that accommodating the needs of the advertiser and its agency contributes to a healthy environment for the industry.
When the company receives a firm commitment from the contracting agency on a job and blocks out a specific period of time dedicated to that job, no further efforts are made to sell that time. If the job is postponed or cancelled within the time frames of the Guideline, it would be highly unlikely in the ordinary course of business to resell this time. Time of its creative personnel and equipment are the primary source of income for the company.
ACCP members acknowledge that jobs are postponed or cancelled from time to time at the request of a client advertiser or its agency for reasons which are contingent on such factors other than weather conditions, key personnel injury, or illness. (see Contingency Day). A change in focus of an advertising campaign, for example, may result in a postponement or cancellation. A postponement is defined as a temporary stoppage of production by request within a period of one (1) to twenty(20) calendar days from the first scheduled shoot day, with the clear intention to restart at a later date. However, if the first day is postponed in excess of twenty (20) calendar days it should be deemed a cancellation by default and re-quoted, with consideration to the recovery of start-up costs. While the costs described below represent the maximum exposures for the agency, clear communication of contractual agreements that may affect cancellation or postponement costs is essential. Such contracts could include but are not limited to key creative and crew personnel, studio or location facilities, special props and wardrobe design, and special equipment rentals.
ACCP members acknowledge that the company is obliged to make all reasonable efforts to re-book the postponed or cancelled time with another agency/client. If the company successfully re-books the time, then the director's or editor's cost and/or markup would be an area for discussion and negotiation.
CANCELLATION- DIRECTED BY AGENCY OR CLIENT
If notice of cancellation is given ONE (1) TO TEN (10) DAYS prior to the commencement of the shoot, the contracting agency will be liable to the Production Company for:
A. All out-of-pocket costs.
B. Full director's and producer's fees as bid.
C. Full production fee on the job as bid.
If notice of cancellation is given ELEVEN (11) TO FIFTEEN (15) DAYS prior to the commencement of the shoot, the contracting agency will be liable to the Production Company for:
A. All out-of-pocket costs.
B. Not less than 50% of the director's and producer's fees as bid.
C. Not less than 50% of the production fee on the job as bid.
If notice of cancellation is given BETWEEN FIFTEEN (15) AND TWENTY (20) DAYS prior to the commencement of the shoot, the contracting agency will be liable to the Production Company for:
A. All out-of-pocket costs.
B. Not less than 25% of the director's and producer's fees as bid.
C. Not less than 25% of the production fee on the job as bid.
If notice of cancellation is given MORE THAN TWENTY (20) DAYS prior to the commencement of the shoot, the contracting agency will be liable to the Production Company for:
A. All out-of-pocket costs.
B. Creative fees, if applicable, and as agreed to at the quoting stage.
C. A production fee of not less than 20% of costs a) and b).
Note: Out of pocket costs are start-up costs that could include but are not limited to booked crew or equipment, contracted crew or services, casting, set designs, location scouting, or special prop design and build.
POSTPONEMENT- DIRECTED BY AGENCY OR CLIENT
*Subject To Director Availability*
1. If notice of postponement is given ONE (1) TO TEN (10) DAYS prior to the commencement of the shoot, the contracting agency will be liable to the Production Company for:
a. All out-of-pocket costs.
b. Full director's and producer's fees as bid.
c. A production fee of not less than 20% of costs a) and b).
2. If notice of postponement is given ELEVEN (11) TO FIFTEEN (15) DAYS prior to the commencement of the shoot, the contracting agency will be liable to the Production Company for:
a. All out-of-pocket costs.
b. Not less than 50% of the director's and producer's fees as bid.
c. A production fee of not less than 20% of costs a) and b).
3. If notice of postponement is given MORE THAN FIFTEEN (15) DAYS prior to the commencement of the shoot, the contracting agency will be liable to the Production Company for.
a. All out-of-pocket costs.
b. Not less than 25% of the director's and producer's fees as bid.
c. A production fee of not less than 20% of costs a) and b).
4. If notice of postponement is given MORE THAN TWENTY (20) DAYS prior to the commencement of the shoot, it should be deemed a CANCELLATION. The conditions of CANCELLATION – MORE THAN TWENTY (20) DAYS will apply. The job should be re-quoted to reflect any cost savings to the agency for the services the company has started and/or completed, provided the specifications have not changed from the original bid. Such areas could include (but are not limited to): casting, set designs, location scouting, or special prop design and build.
Out-of-pocket costs are costs that could include but are not limited to booked crew or equipment contracted crew or services, casting, set designs, location scouting, or special prop design and build.
CONTINGENCY DAYS
A contingency day is any day where a scheduled film or tape shooting has been prevented from occurring or completed due to circumstances beyond the control of the Production Company. These circumstances may include, but are not limited to:
● Any weather conditions not consistent with the prescribed shooting conditions desired by the Agency or considered a safety hazard for personnel and equipment.
● Any conditions leading up to a shoot day, which affect the viability of the approved location (All locations must have been viable at the time of presentation and approval).
● "Force majeure" events (earthquakes, riots, floods, acts of war, etc).
Injury or illness of key advertising agency personnel.
●Absence of agency supplied elements (talent, product, colour correct packages, etc).
● Non-performance of talent or animals.
At the quoting stage, upon request, the company will provide the contracting agency with a maximum exposure figure (a "not to exceed" figure) as a contingency day cost. The estimate will represent the maximum costs should contingency day be called after 1:00 PM prior to the shoot day. This will be a cost per day figure. However, this figure will not include the cost of premiums for crew or suppliers (i.e., should the contingency day fall on statutory holidays or premium days based on consecutive employment.)
Upon request, a second estimate will be provided prior to the first shooting day. This estimate would reflect the cost of postponing the shoot day up to 1:00 PM the day prior to the scheduled shoot date. The rescheduled shoot day would be the day after the original shoot day(s).
In any contingency situation, careful consideration should be given to the availability of key personnel, which may include the client, agency, director, DP and other key technical crew, and to the triggering effect and financial impact of weather postponements on editorial and post-production fees and expenses.
1. The cost of a contingency day called prior to 1:00 PM the day prior to the first shoot date shall consist of the following:
a. All out of pocket costs.
b. A maximum of 50% of the daily director's fees as bid*.
c. A service charge of no less than 10% of all direct costs.
2. The cost of a contingency day called after 1:00 PM the day prior to the first shoot date shall consist of:
a. All out of pocket costs.
b. A maximum of 100% of the daily director's fee as bid*.
c. A service charge of no less than 10% of all direct costs.
*There should be a clear understanding during the quoting stage with the contracting agency, of the Production Company's policy on director's fees in the event of contingency days.
Out of pocket costs are costs that could include but are not limited to booked crew or equipment, contracted crew or services, casting, set designs, location scouting, or special prop design and build.
Based on a bad weather forecast, the potential exists for the agency to incur costs with the intention of preventing postponement of the scheduled shoot (E.g., additional electricians and grips, additional lighting, trucking and possibly location dressing and personnel). The Production Company will provide an explanation of these costs, which will include a handling fee of not less than 10%, and agreed to by the agency before being incurred. This could also apply to overtime incurred due to a delayed start or downtime during the day for bad weather.
The Production Company recognizes its obligations to minimize Contingency Day liabilities and will apply all conventional and accepted industry cancellation privileges.
INSURANCE
The ACCP believes that the Production Company is in the best position to identify and quantify the risks associated with the production of a live commercial. The ACCP's production house members maintain insurance coverage in areas consistent with accepted industry standards. Any unusual aspects or risks should be identified in the quoting process, and any required additional insurance may be obtained or declined and included in the quote.
Such risks may include, but are not limited to:
- Loss or damage to the negative after delivery of dailies and negative has been made. (I.e. extension through complete post-production - a negative film float).
- Special props, such as jewellery, furs, antiques, fine arts etc.
- Aerial or hazardous photography·
- Animals & Livestock·
- Picture vehicles, boats and aircraft
- Cast insurance·
- Weather insurance·
- Key personnel Life Insurance·
- Additional agency expenses (i.e. travel costs)
- Listing the Agency as additional insured
* Currently, contracts vary between insuring companies, specifically as they relate to post-production and terms completion. Clearly, this should be defined and evaluated at the bidding stage. A negative film, or tape master floater, post-production, if deemed appropriate, can then be obtained by the production company and the premium allocated.
EDITORIAL
ACCP TORONTO CANCELLATION AND POSTPONEMENT GUIDELINES CREATIVE EDITORIAL
Upon signing this Agreement, it is understood that Post Production Co/editorial company (hereinafter “editorial company”) will block out a specific period of time. The agency, upon notice and under the terms outlined below, may cancel or postpone the job outlined in this Agreement, under which circumstances the editorial company shall make all reasonable efforts to sell the cancelled/postponed time to another agency/client.
"Postponement" is hereby defined as a period of time that is less than 30 business days (or 6 weeks) in duration. A period greater than 30 working days (6 weeks), therefore, becomes a cancellation by default. Consideration will be given to out-of-pocket expenses, discounts given to resell the time, and other relevant considerations.
1. If notice of cancellation/postponement is given within one to five business days prior to the scheduled starting date the agency/client will be liable to Company for:
a. All out-of-pocket costs.
b. Editorial, Labour/Creative and Assistant fees as indicated in the attached Cost Summary.
c. Full (100%) Production fee as indicated in the attached Cost Summary.
d. Full (100%) Edit Suite time as indicated in the attached Cost Summary.
e. Any additional cancellation fees associated with the transfer, online or animation as indicated in the cost summary.
2. If notice of cancellation/postponement is given six to ten business days prior to the scheduled starting date, the agency/client will be liable to editorial company for:
a. All out-of-pocket costs.
b. Editorial, Labour/Creative and Assistant fees as indicated in the attached Cost Summary.
c. Full (100%) Production fee as indicated in the attached Cost Summary.
d. Half (50%) Edit Suite time as indicated in the attached Cost Summary.
e. Any additional cancellation fees associated with the transfer, online or animation as indicated in the cost summary.
3. If notice of cancellation/postponement is given more than ten business days prior to the scheduled starting date, the agency/client will be liable to editorial company for:
a. All out-of-pocket costs.
b. Editorial, Labor/Creative fees as indicated in the attached Cost Summary.
c. Half (50%) Production fee as indicated in the attached Cost Summary.
d. Any additional cancellation fees associated with the transfer, online or animation as indicated in the cost summary.
NEGATIVE/ RAW FOOTAGE INSURANCE
The Agency shall, without cost to the editorial company, provide a certificate of insurance naming the editorial company as insured and reflecting such coverage. Such certificate may be specific to a project or in the form of a blanket cer covering all projects within a specified time period. In the event the agency or advertiser does not maintain insurance for loss or damage to the original source material (i.e. camera negative, tapes, hard drives, discs, etc.), it is expressly understood that the editorial company is not responsible for loss or damage of said material.
EDITORIAL COMPANY INDEMNITY
Agency hereby agrees to indemnify and hold editorial company harmless against and from any and all claims, suits, actions, debts, damages, costs, losses, liabilities, obligations, judgments, charges, and expenses (including but not limited to solicitors fees), of any nature whatsoever, suffered or incurred by editorial company directly or indirectly, as a result of or in connection with any loss and/or damage or alleged loss and/or damage to the original source materials.
PAYMENT FOR POST-PRODUCTION
Unless otherwise specified and agreed to by all parties, the following constitutes standard procedures of payment. Payment Procedures for Post Production services: a) First Payment: 75% of the total budget. This amount is due upon award and prior to editorial services commencing. Second Payment: 25% of the total budget. This amount is due and payable within 30 days of the date of the final invoice.
FINANCING FEE FOR OVERDUE PAYMENT
If payment is not received within the terms listed above (delivery of master or 30 days, whichever event occurs first), a financing fee of 2% compounded per month will be billed to the contracting agency.
INTERMEDIATE MATERIALS
The contracting agency or client buys only finished media, not any intermediate data or materials that may be generated and used by the editorial, design or post-production company to create the finished media. At the conclusion of the engagement, the agency/client is entitled to possession of all of the original elements delivered to the editorial, design or post-production company by the production company or other third parties on behalf of the agency or client and to a master recording or master data file of the finished media.
All intermediate Materials created by the editor, artist or designer, including, but not limited to, transcodes, project file select bins, rough cut bins, audio bins and all other metadata files created by the editor, artist or designer, constitute the exclusive property of the editorial, design or post-production company.
The agency or client is not entitled to possession of these intermediate materials and requires no right with respect thereto. This bid is offered pursuant to ACCP standard procedures and cancellation policies.
OVERAGES
If, after the job is awarded and a change to the approved scope of work or budget is anticipated, an overage request will be provided to the Agency Producer.
Additional work that exceeds the approved budget will not commence without an email or written approval of the overage by the Agency Producer. Overages will be subject to the same post-production markup as applied to the original approved budget.
AWARD OF PROJECT
The Parties acknowledge their complete understanding of the information within this agreement, and the issuance of a purchase order will represent a confirmation of consent to proceed with the project. A purchase order must be issued within 2 business days of the award of the project. Editorial work will not commence without the receipt of a purchase order. For agencies who do not use purchase orders, an email with a signed and dated copy of the quote will suffice as consent to proceed with the project. The quote is a firm bid. The editorial company agrees to fully complete the work outlined in this estimate and manage the job within the projected schedule to the best of its abilities.
TRANSFER / ANIMATION / VFX
CANCELLATION AND POSTPONEMENT GUIDELINES POST COMPANY
Upon signing this Agreement, it is understood that Post Production Co/ VFX / Transfer Facility (hereinafter “Post Company”) will block out a specific period of time. The Agency, upon notice and under the terms outlined below, may cancel or postpone the job outlined in this Agreement, under which circumstances the Post Company shall make all reasonable efforts to sell the cancelled/ postponed time to another agency..
If the time is resold, then the agency and the Post Company shall enter into good faith negotiations to determine the amount owing for the cancellation/postponement. In doing so, consideration will be given to out-of-pocket expenses, discounts may be given to resell the time and other relevant considerations.
POSTPONEMENT
Postponement fees are up to the discretion of the Post Company. "Postponement" is hereby defined as a period of time that is less than 30 business days (or 6 weeks) in duration. Periods greater than 30 working days (6 weeks), therefore, become a cancellation by default.
CANCELLATION POLICIES
Bookings of 3 days or more are subject to a 50% fee if cancelled within 5 days business days to 72 hours of the booking. After 72 hours, standard cancellation fees, noted below, apply. Any project purchase ordered by the agency/client will have a 100% cancellation fee regardless of the time of cancellation.
Bookings under 3 days are subject to the following cancellation fees:
● 24 hours - 100%
● 48 hours - 75%
● 72 hours - 50%
NEGATIVE/ RAW FOOTAGE INSURANCE
The agency shall, without cost to the Post Company, add the Post Company as named as an additional insured party under such policy or policies. The agency or advertiser shall deliver to the Post Company a certificate of insurance naming the Post Company as an insured and reflecting such coverage.
Such a certificate may be specific to a project or in the form of a blanket certificate covering all projects within a s time period.
In the event the agency or advertiser does not maintain insurance for loss or damage to the original source material (i.e. camera negative, tapes, hard drives, discs, etc.), it is expressly understood that the Post Company is not responsible for loss or damage of said material.
POST COMPANY INDEMNITY
Agency hereby agrees to indemnify and hold Post Company harmless against and from any and all claims, suits, actions, debts, damages, costs, losses, liabilities, obligations, judgments, charges, and expenses (including but not limited to solicitors fees), of any nature whatsoever, suffered or incurred by Post Company directly or indirectly, as a result of or in connection with any loss and/or damage or alleged loss and/or damage to the original source materials.
PAYMENT FOR POST-PRODUCTION
Unless otherwise specified and agreed to by all parties, the following constitutes standard procedures of payment.
Payment Procedures for Post Production services: a) First Payment: 75% of the total budget. This amount is due and payable when the master ships or within 30 days, whichever comes first. The second Payment: 25% of the total budget. This amount is d and payable within 30 days of the date of the final invoice. If 100% invoice is sent upon completion, it will be due within days.
FINANCING FEE FOR OVERDUE PAYMENT
If payment is not received within the terms listed above (30 days), a financing fee of 2% compounded per month will be billed to the agency.
INTERMEDIATE MATERIALS
The agency or client buys only finished media, not any intermediate data or materials that may be generated and used by the Post Company to create the finished media. At the conclusion of the engagement, the agency or client is entitled possession of all of the original elements delivered to the editorial, design or Post Company by the production company or other third parties on behalf of the agency or client and to a master recording or master data file of the finished media.
All intermediate Materials created by the artist/designer/studio, including, but not limited to, working files for Flam Animation, CG, Motion Design, Transfer projects and all other metadata files created by the artist or designer, constitute the exclusive property of the design or post-production company.
The agency or client is not entitled to possession of these intermediate materials and requires no right with respect thereto. This bid is offered pursuant to ACCP standard procedures and cancellation policies.
OVERAGES
If, after the job is awarded and a change to the approved scope of work or budget is anticipated, an overage request will be provided to the Agency Producer. Additional work that exceeds the approved budget will not commence without an email or written approval of the overage by the Agency Producer. Overages will be subject to the same post-production markup as applied to the original approved budget.
AWARD OF PROJECT
The Parties acknowledge their complete understanding of the information within this agreement, and the issuance of a purchase order will represent a confirmation of consent to proceed with the project. A purchase order must be issued within 2 business days of the award of the project. Editorial work will not commence without the receipt of a purchase order. For agencies/clients who do not use purchase orders, an email with a signed and dated copy of the quote will suffice as consent to proceed with the project. The quote is a firm bid.
POST COMPANY agrees to fully complete the work outlined in this estimate and to manage the job within the projected schedule to the best of its abilities.