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If you want to know the story of Cannon films, watch a documentary called, Electric Boogaloo: The Wild, Untold Story of Cannon Films. It's really interesting stuff.
If I remember it correctly, they would mock up posters of films, go to film festivals and sell the distribution rights to those non existent films.
With the money raised, if there was enough, the film would go into production. Or something to that effect.
That's a great documentary.
And John Travolta! (without ever naming the movie)