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 typically prefer this arrangement because it ensures a return in case the film does not perform well or exceeds its budget, and also helps cover the producer's expenses. Nevertheless, profits from one film cannot be used to compensate for losses incurred by other films, which makes the partnership somewhat uncertain.