Escrow requires you to place the initial fees in an account at a state bank that agrees to act as your escrow agent. Some state banks will require you to have a bank account (savings, checking, etc.) with them before they will agree to act as your escrow agent. The process is often cumbersome and expensive.

The biggest challenge is having the funds released from escrow. The bank would need to go through the state to begin the release process, at which time you will have to prove to the state examiner that you have performed all of your obligations to the franchisee. The examiner will then correspond with the franchisee to let them know there has been a request to release the funds. The franchisee would need to state whether or not you’ve fulfilled your obligations to them, and then based on the franchisee’s statement, the state would go back to the bank to advise on release. Each of these communications is afforded its own time period for response (30 days, 15 days, etc.). In our opinion, this puts too much control in the franchisee’s hands, and it doesn’t set the right tone in terms of leadership and who is in charge of the relationship.