That is a really weird question. FBO's can charge whatever they want for instruction if the instructor is on the payroll as an employee and they also can pay the employee whatever. If the instructor is an independent contractor he/or she will need to set the price for that given service (i.e. instruction) and receive all of it. If an FBO is charging $35/hr for instruction (i.e service) and giving the contractor a set rate of let's say $20/hr - that is illegal according to the IRS, whether they remain in business is not a question as many illegal practices go on everyday. If the FBO rents the aircraft only, their profit would come from the aircraft rental, not an extra part of instruction.