Most Favored Nations (PART 1 of 2)

The “Most Favored Nations” clause came about as an international trade term, giving one country equal status to another country with respect to tariffs, regulations and quotas.  In the talent agreement context, this concept is used similarly, so an actor receives equal treatment to all other actors on a project with respect to any number of provisions, including the type of compensation the actor receives (e.g., flat fee, profit participation or box office bonuses) or the standard of travel (first class versus coach).  When I am representing an actor on a talent agreement for a feature film role, I always ask for Most Favored Nations (or “MFN,” as is the industry nomenclature), to ensure no other actor on the film is getting a better deal than my client.

How does this work?   Since all actors on a movie are negotiating their own deals separately, each actor will be receiving different compensation and different “perks,” depending on a variety of factors, including the stature of the actor, the size of the role, the aggressiveness of the talent’s representative, or how badly the producers want to cast that particular actor, for example.  If the producers want to sweeten the deal to get an actor, they will offer more money, different types of compensatory incentives (e.g., box offices bonus), better credit position, better perks or whatever the budget will allow to get the actor to accept the role.

However, since the other actor deals are confidential, I can’t be certain my client is getting the best deal possible unless the producers agree to MFN.  With MFN, I don’t need to know what any other cast member is receiving as long as I know that whatever they are receiving, my client will receive the same (or better!) for that provision.  MFN allows me to feel content that my clients are getting treated equal to the rest of the cast.  Just the phrase “no less favorable than any other cast member” added to certain clauses in the talent agreement gives my clients and I the confidence they need to close the deal.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.

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