I think this is also a "buyer beware," issue
So long as the students are told up front that it is a school certificate, I see no issue.
If students are being provided with dan certificates issued by individual masters and GMs, they need to know that and realize it might be difficult for them to transfer to other schools.
I guess that it depends on what you mean by transfer. Anyone can pretty much transfer into any school simply by signing up, but their rank will likely not transfer. Some schools will evaluate the student and rank them accordingly. Others will allow them to retain their rank but not allow them to advance until they have learned everything up to and including what that rank requires in that system.
There are many dojangs out there -- mine included -- which will not recognize dan certification issued by an individual master or grandmaster. I recognize Kukkiwon certification and will also recognize dan certfiication from some organizations that I know.
With regards to these other organizations that you know, is it a straight transfer of rank based upon similarity of curriculum or do you evaluate the student first?
Personally, I think that portability of rank is vastly overstated. 90% of those who start a martial art quit either at blackbelt or before. Some quit to start another MA, in which case portability of rank is not an issue, while most just quit having either achieved their goal or having moved on to other things.
Of that remaining ten percent of those who do not quit, only a small percentage really
needs the portability, generally because of moving or because of having some kind of falling out with their current school. The rest either just stay with the school they have been at or open one of their own, or after many years, branch out into other arts, in which case rank portability ceases to be an issue.
My numbers, by the way, are approximations based on personal observation and what others have told me. No hard science to back them up, so I certainly could be wrong.
Realistically, I think that most schools do some kind of evaluation of a student who claims to be ranked as a black belt from another org in the same art (unless the owner is just that greedy for testing fees). Practically, sticking a black belt in with a bunch of white belts can be a recipe for trouble (I have seen more than my share of KKW BB's who do not have the maturity that one expects of a black belt), or it can simply turn off the new student who will then take his dollars elsewhere; if he has to start over, he may as well learn a new art and then go on B-shido and talk about what a crock TKD is.
Daniel