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I was in TKD for awhile when I was 9, had to stop when our family hit some financial problems. I went in thinking I would be the next Karate Kid, but it didn't take me long to realize that there's more to the martial arts than jump kicks and 'numchuks'.
One thing to look out for (mostly in larger schools), is how liberal the school is in awarding belts. Since most schools charge money for belt tests, and everyone's goal is to be a black belt, an unscrupulous master can get away with teaching your son next to nothing, and then charge you for a new belt every month.
The smaller school sounds like the right choice, but there's a lot to be said for larger schools with (possibly?) more experienced teachers.
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