A second risk arises from the need to develop a business agreement for each LLC. As with a company, standardized LLC enterprise agreements found in form books may not be suitable for independent filmmakers. Each company will have its own investment strategies, distribution plans and expectations in terms of continuation and other projects, and these features should be reflected in the enterprise agreement. Some productions, for example, will limit capital flows to the LLC to protect initial investors. (However, film investors are not more often concerned about the level of investment of other parties, as long as all funds raised are used exclusively for the production of the film.) Alternatively, we offer our film Investor Agreement Outline, which contains explanations, standard clauses and key sections for active investors. It is not a comprehensive legal agreement, like the PPM, but guidance and information and a large number of legal languages that can be reused. Technically, the executives of the umbrella organization LLC have no direct connection with the investors of the FILM LLC project, but the parties should not rely on this legal fiction; Each filmmaker should treat their duties to investors as if they were a personal manager of the LLC project. Structure two LLC is not likely to immunize filmmakers from their ethical and fiduciary obligations described in Chapter 3 and should not be used for this purpose. The terms of the film LLC project should establish that the company`s activities are limited to the film concerned.
The company is managed by the umbrella company LLC, so the enterprise agreement should be very clear about the authority of the executive – the managing company must have sufficient leeway to shoot the film and give clear direction as to its operating power, and the role of the investor members should normally be limited. This does not mean that filmmakers are not required to inform investors about finances, production or distribution plans. Perhaps the most important clause in a settlement agreement is one that compensates owners for damages resulting from the use of the premises for filming and continues to protect owners from the unlawful obligations that may result from filming. In addition, producers generally include a disclaimer in the location agreement, that any representation of the location is fictitious and that such filmography does not necessarily constitute a true reflection of the actual location.