Matter of Southland Corp. v. Attorney-General of State of N. Y

In Matter of Southland Corp. v. Attorney-General of State of N. Y. (148 Misc 2d 390), the court reasoned that the protective purposes of the Franchise Sales Act did not bar negotiations of the terms of the contract during the period that the offering prospectus was awaiting approval from the Attorney General. ( Matter of Southland Corp. v. Attorney-General of State of N. Y., supra, at 394.) In fact, the court observed, "the statute does not purport to regulate the contractual relationship at all, or to authorize the Attorney-General to do so." ( Matter of Southland Corp. v. Attorney-General of State of N. Y., supra, at 396.) The Southland court determined that the purpose of the statute was served by requiring franchisors to supply prospective franchisees with "material information necessary to make an informed judgment concerning the offer ... but does not ascertain the truthfulness of the information contained in a prospectus" or "regulate the substantive terms of the offer or sale." ( Matter of Southland Corp. v. Attorney-General of State of N. Y., supra, at 394.)