different people like different things. Some prefer a more "Health Club" atmosphere-they just want to go in, do their workout and go home.
Face it, nobody refers to their fellow gym members as their "step-class brothers."
Others, like myself, enjoy a more "private club-like", or family, Old school Mo-Kwoons, where the student is "part of something."
These do not have to be small either. You can have a larger, more successful Mo-Kwoon, where the older brothers take the younger brothers under their wings, and still have a personal approach with the training.
Red Flags come from your gut instinct.
Contracts are NOT a sign that the school is too commercial, simply that they have an overhead. A nicer facility requires rent, heat, electricity, and well-maintained equipment. Contracts are simply tuition billing systems that takes the responsibility out of the Sifu's hands,of chasing down students who don't make timely payments, or try to get something for nothing.
A ranking system, whether it is colored sashes or something else, only means that the teacher has a step-by-step, well thought out curriculum, and gives his students a sense of accomplishment. However, if you see a large amount of students with high rank, and zero skill-then that would be a red flag.
As far as student skill levels are concerned, remember that in any school, there will be a solid core of hard-working, go the extra mile,skilled, talented students. These are the exception. Not everyone is going to be a Bruce Lee. Most are regular people. There will also be those who are completely ungifted, yet enjoy coming to class.
Red flags are also people teaching systems with no history. People who have flamboyant 'lineages' and made-up systems, or mysterious origins. Lineage counts for something-legitimate styles. But lineage will only get you so far. You could be the worst student under the best teacher and have great lineage.There could also be a teacher who while not being a lineage bearer, could very well be a better teacher due to his skill, knowledge, ability to teach, and passion.
Look for a teacher who is still learning, studying,refining their skills, and training. Someone who is content with themselves, no longer seeks a higher mountain. They feel they are that higher mountain. This also means that their knowledge is ot evolving, but decaying.