Legal Definitions - formula deal

A formula deal is an agreement between a movie distributor and a theater chain, either independent or affiliated, to show a particular movie in all theaters at a set percentage of the national gross receipts earned by the theaters.

For example, a distributor might agree to a formula deal with a theater chain to show their latest blockbuster movie in all of the chain's theaters across the country. The deal might specify that the theaters will receive 50% of the national gross receipts earned by all theaters showing the movie.

This type of deal is beneficial for both the distributor and the theater chain. The distributor is guaranteed a wide release for their movie, while the theater chain is guaranteed a popular movie that will attract audiences and generate revenue.