This is likely to be an unpopular post but here it goes.
I strongly dislike this idea.
Maybe it's the school person in me but I look at (pretty much everything) from a "what's best for kids" perspective. I'm not too concerned with gym owners, they're adults, they can make their own business decisions about where they compete and who to compete against. This whole idea will crush kids though. It's the same as putting "I'm on the B team" on the back of their uniform. How is that positive or encouraging to visually compare kids to other kids, because that's what this is doing. Categorizing kids into who is considered "beatable" and who might put up a greater challenge?
I'm just feeling like this concept is a page (or chapter) out of A Brave New World.
Having built middle school master schedules that had to account for AIG (academically and intellectually gifted) students which had to be grouped together, invariably kids would (in about 6.7 seconds) determine who was on the "dumb team" and the "smart team" based on what kinds of kids were grouped into their academic teams. Parents would scream and holler they didn't want their kid on that "dumb" team because heaven forbid they weren't on the team with all the AIG kids who were clearly so much smarter (insert sarcasm here) than those regular ed dregs of society. Its caustic. And it's completely detrimental to the kids involved. Even in the school that had 2 AIG teams, the kids and parents ferreted out in their mind which was the "smart AIG team" and which was the "dumb AIG team" (you can't make this up) and then those poor lost souls on the regular ed team that apparently will only ever work at Walmart or the local gas station. As they say in the South...bless their hearts.
I don't think anyone will argue that different gym locations differ in the quality of teams they put out either for their access to kids, their coaching, their philosophy of total program development or whatever the reason. So, what possible good can come (in terms of the athletes) for stratifying them and identifying them by color. It's just like our middle school was. The "blue" team was the smart team. the "green" team was the dumb team.
Even if location B isn't as strong as the flagship location, does that mean they're not even allowed to wear the brand's color? I guarantee you that's how the kids would look at it...I've lived that. "I'm not good enough" or "my team isn't good enough" to wear teal, black and white - so we have to wear lime green and navy blue (just picking colors out of the air if those are yours).
I'll use my own two as examples. Its incredibly hard on the kid who ISN'T on the flagship team to maintain confidence and positivity in the shadow of their sibling. (even when they're competing at the same level). If you tell her she isn't even allowed to wear the brand's colors you might as well just tell her, "honey you're not good enough to wear the uniform....maybe later."
I don't see how that (in any sense, even if its the B location that turns out a kick a$$ team that beats the flagship location) the conversation that begins with "oh that yellow J3 is better than the green one" is a good thing for any kid wearing any color. Even if those kids are never going to be competitive with their own flagship team, there's nothing positive about specifically excluding them from an organizational identity that is bigger than themselves.