Minimumgaranties

Minimumgaranties, or minimum guarantees, is a contractual concept used primarily in licensing and distribution agreements for entertainment content. It refers to a fixed payment promised by the licensee to the rights holder as part of acquiring rights to a film, television program, music, game, or other media. The purpose is to provide revenue certainty to the rights holder and to allocate economic risk between the parties.

Typically, the minimum guarantee is paid upfront or in installments and is often recoupable against future earnings generated by the licensed rights, such as box office receipts, streaming revenue, or home video sales. The exact recoupment method is specified in the agreement and can be based on gross receipts, net receipts, or a specified waterfall. Some arrangements treat the MG as non-recoupable, effectively guaranteeing a minimum income to the rights holder regardless of actual performance.

In practice, minimum guarantees influence licensing decisions, budgeting, and risk allocation. For rights holders, MG reduces revenue volatility but introduces the risk that the upfront payment may not be fully recouped if the content underperforms. For licensees, MG represents a fixed cost that must be recouped through later revenues, shaping terms such as territories, windows, and payment timing. Negotiations typically address the amount, timing, recoupment structure, escalation provisions, and audit rights.