This is preferred by investors as it guarantees some return if the film fails or has budget overrun and from the producer's overhead. Profits from a single film cannot be used to cover losses on other films, making the partnership somewhat risky.
Investors generally prefer this arrangement since it guarantees a return in case the movie underperforms or exceeds its budget, and also helps cover the producer's expenses. However, profits from a single film cannot be used to compensate for losses incurred by other films, which makes the partnership somewhat precarious.