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In recent years, Hollywood has become more and more a business of creating and exploiting franchises rather than simply making and distributing movies. This is partly because the costs of promoting a movie are so great that the studio wants to be able to reap the benefits of this initial expenditure by producing and releasing sequels. The studio also wants to be able to “extend the brand” by being able to exploit the franchise in multiple ways (through merchandise, publications, interactive games, theme park rides, stage plays, etc.).
Although occasionally a franchise is still created from scratch (e.g., Toy Story, Avatar), often the studio licenses rights to an existing character or other property that already has at least some built-in audience. (It's “pre-sold” in current parlance.) The licensed property can range from a novel (the Bourne movies), to a comic book or graphic novel (Spiderman), a toy (Transformers), a theme park ride (Pirates of the Caribbean), an interactive game (Resident Evil), an older movie or television property (The A Team); there is practically no limit to the human imagination's ability to find ways to build upon and expand existing sources.
If you are the owner of a property that is being licensed into a potential motion picture franchise, how do you contractually protect the rights to your existing character or property so that the movies and related items being created do not damage your preexisting property? This article examines the approaches customarily utilized. Although I will primarily discuss motion pictures below, the analysis is much the same for television productions.
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