I planted this yellowwood tree (Cladrastis kentukea) about seven years ago, and had come to enjoy its shade and shape, not to mention the chains of white flowers that appeared briefly each spring. It's an ideal "medium-sized" tree when you want something in the yard bigger than a dogwood but not as large as, say, an oak, maple, or ash. By the way, the yellowwood does have yellow wood.
When I first planted it I noticed an encircling "J-root," a root that circles around the trunk and as the tree grows may constrict itself to death. A J-root usually is the result of nursery stock grown too long in a container; the roots get used to circling and continue to do so even after the tree is planted in soil.
I cut out the J-root, but apparently there were others deeper in the soil, and as the tree got bigger the root squeezed the trunk to death. The tree declined last year and was dead this spring.
Trees that are sold balled-and-burlapped are less likely to have this problem; they were grown in a nursery field and dug up to be sold. They may have had some roots cut when dug, but these will grow back when planted (many nurseries cut a few of the roots a year or two in advance, and then dig the root ball large enough to contain the re-growing roots). Container-grown plants are seedlings that have been transplanted to ever larger pots as they grow. They, too are fine, as long as they aren't allowed to outgrow their container.
I think it is socially acceptable to carefully pull a plant out of its container before you buy it to make sure it doesn't have a root-bound condition (but please ask first). When you plant them, you can loosen the root ball of herbacious plants, even make few slices to fan the roots out. With trees this is more difficult, and as I learned, not always successful.
Transplanting smaller trees is also a good idea. They're less likely to have been kept in the container too long, and will handle the shock of transplanting better. After a few years they may even be larger than a tree that was larger when it was planted.
I replaced the yellowwood with a serviceberry tree (Amelanchier), which I am sure I will come to enjoy just as much.