This concept of providing something for free is an interesting one.
Aviation, like a few other sports, straddles the divide between a professional occupation and a “hobby”. I can also think of sub aqua and perhaps sailing as other examples. Sailing is at the extreme given that almost no body involved with sailing makes money from the sport - yes there are delivery skippers and there are some professional race skippers but in the main it is a “hobby”. Never the less there are RYA approved schools where you will pay for a course of sailing instruction, there are “non approved” schools where you will also pay, and clubs where members will take you out for a sail and will, with any luck, teach you how to sail, usually in a “non structured manner”.
Perhaps it is “structure” that provides the key. If you pay for a course of instruction you can reasonably expect that a feature of the contract will be the course is structured - structured in terms of how standards are maintained, at what times the service will be available and how the course material will be taught. (I might add because this is what you can reasonably expect it doesn’t always mean this is what you will get).
On the other hand, certainly with free lance instructors, analogous to a degree with the sailing club member, there may be a distinct lack of structure. The member will almost certainly have other commitments so the training will only be available when it suites him. The training will not be supported by the back up provided by an organisation. If the instructor is ill the training will stop, the instructor is not in the business of providing infra structure, so there will be no simulators, no back up aircraft or boats, no briefing rooms etc.
Aviation training, unlike sailing, is regulated by law. In consequence the standards of training should always exceed a minimum standard. However, the freelance instructor and the fly training school are both capable of meeting that standard. Each is offering a different product and has very different over heads to cover.
Training schools have confused themselves. Many of the instructors accept their pay is in two parts - the first part is money, the second part is hours which they need for their future career. In exactly the same way this is why delivery skippers use to be paid a pittance. The instructors are often self employed or at least are paid as if they were. The schools make money out of the aircraft rental. If you employ a solicitor he charges solely for his time, but something like 40% will cover his salary, 30% covers the overheads, and 30% is profit for the partners. As a consequence the instructors are devalued by the schools and are “treated” as if they were self employed but enjoy few of the benefits of being self employed because it is assumed part of their pay should be in kind. The instructors generate the profit of the business but as such they are not charged out as if they were.
So my point is that the training industry has always sat at an uncomfortable crossroad - it wants to operate as a “proper” business adopting the accepted model of a commercial service providers, but it doesn’t want (or cant or wont) adopt the same business practices of a commercial service provider in any other industry. It is therefore its own worst enemy and probably has little to complain about if some freelance instructors are willing to provide their services for free.