Kapten Kretin
I agree that what you describe is the norm but I don't think that it is ethical or necessary.
In the UK flight PPL training makes an overall loss and clubs are being "subsidised" into profit by professional flying instructors which is unethical and sharp business practice.
What I have noticed is that CFI's recruit a new batch of instructors each summer without any regard for the existing FI's who now have their income slashed when they have survived a lean winter and should be flying and earning good money. This p@$£ses off the instructors who start job hunting in earnest so that they don't have to suffer another dismal winter in la la land. No doubt the CFI would argue that they will be jumping ship for an airline at the drop of a hat in the autumn so he is just protecting the clubs interests.
From what I can see it is a mutually abusive relationship founded on distrust, greed and exploitation.
The only person winning is the salaried CFI who is doing well by the high turnover of eager new FI's who do all of the circuit bashing while he creams off all of the more lucrative flying for himself and his buddy.