Doesn't your 1st sentence contradict the last? If the instructor is working through an FTO (which I believe he must, though I don't have a reference for it) then he isn't 'freelance'.
A 'freelance' instructor is one who has a JAA FI rating, a CPL/BCPL so he can receive payment (IF he receives payment - may not be the case), and works entirely alone.
Most freelance instructors will operate as a Registered Facility (RF), rather than as a Flight Training Organisation (FTO). No approval from the CAA is required to be an RF- just 'registration' of some basic details. The RF can consist of just one instructor, and no other staff, so it allows an FI to operate, in effect, 'freelance'.
Incidentally, many flying clubs also operate as Registered Facilities too. The downside is that there are some restrictions on the type of training that can be provided, e.g. training for issue of a multi-engine class rating must be done by an FTO.