My only issue with this is that until ~9th grade most kids are useless at fighting. You've got to be well into puberty before you can fight usefully.
I see little shits who can't fight worth jack receive belts that they can't possibly deserve. The result is (best case) a little shit who thinks he is a 'tough guy'. It's the worst of the "everyone is a winner" mentality and and the gym owner is going to continue giving kids rank so their parents continue to pay the bills. The term used is McDojo. They target the soccer moms to have yet another place to drop off the kids so they can go drink their 4PM wine.
A 'good' boxing gym (which isn't in the whole belt/rank stupidity), won't let little kids spar until they are 13-14. Just not enough control and (best case) it becomes a slug fest.
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