Which of the following best describes the sequence forced by recoupment in the described agreement?

• A. Revenue shares are paid before any recoupment
• B. The advance is recouped before any additional revenue sharing occurs
• C. Recoupment occurs after all profits are distributed
• D. No revenue sharing occurs at all

Answer: (B)

In these deals, money advanced to the creator is treated as a loan to be paid back from future revenue before any ongoing royalties or revenue sharing kick in. That means the investor first recoups the advance from the project’s revenue, and only after that recoupment is complete do the creator’s revenue shares begin. That waterfall ensures the financier gets back the invested amount before the creator receives ongoing payments.

So the sequence described—the advance being recouped before any additional revenue sharing occurs—best fits how recoupment typically works. The other options would imply paying out royalties before recoupment, delaying recoupment until profits are distributed, or eliminating revenue sharing altogether, which do not align with standard recoupment mechanics.