Read the contract. See what, if any, ways to cancel it are provided. If there's no cancellation possibility... think carefully about signing it.
Contracts aren't evil in and of themselves. They're good for the business; he's got bills to pay, and knowing he's got money coming in is kind of important for him! A year is probably about as long as I'd suggest signing, unless they allow you to cancel it in a reasonable manner. I'd definitely be reluctant about signing a lengthy contract without experience in the system and school. They also protect you from variation in the fees, and spell out what you get for your money.
I would like to emphasize this point. You can go back and forth forever about if it's 'right' to commercialize a martial art, but when it does happen, the contract is awfully important to keeping the business running. These can be the difference between keeping open and closing down in the bad attendance months.
But enter into it with your eyes open. Know what you're getting, and what your options are. Make it worth the money.