"If you lose, by custom you have to leave and cede the school to the challenger."
This sounds like it's right out of a comic book, to quote Jim Kelly.
Let's remember the idea of a martial arts school - somewhere where you could go and pay for a class and learn martial arts - didn't appear until 1836 in Guangzhou - and that was only one small area of China. From there they grew, in parallel with the western influence in China, which was all about trade. Martial arts schools and in fact, most of the big "styles" we know today all grew up hand-in-hand with commerce and the change to a modern world of going from working in fields to working in factories and a more urban existence. Almost all of the big styles appeared after this date - they were always a brand.