This type of situation is not uncommon at all, and unfortunately, some instructors deal with it better than others. I make it known to anyone who wishes to take a CCW class from me, that if you are not already knowledgeable and proficient with your firearm, you are not likely to pass my class. I have set a standard for a passing grade that is more stringent than the state mandates and make this VERY CLEAR to any potential clients. If all they are in search of is an instructor that will sign them off for CCW with minimum fuss or effort they are better off not wasting my time or theirs by attending one of my classes.
A CCW class should not be an introduction to firearm basics. This is why there are courses such as the NRAs Basic Pistol Course. My role as an instructor is to try to ensure that they have a clear understanding of laws regarding the use lethal force in self defense, and that they are capable of handling a firearm in a safe manner. Many states that require a scored range session and practicle skills demonstration do not set the bar high enough for me to feel comfortable signing someone off if all they accomplish are the minimums. At a minimum, this makes the instructors morally liable, if not legally liable should this person act in a manner that would call into question the quality of the training.
IMHO CCW classes should not be confused with classes intended to teach the basics of safe gun handling to those who have little or no experience. While i frown on any legislation that restricts the rights of people to carry, I feel a responsibility as an instructor to insure that the people in my classes are well prepared for the responsibility of carrying a gun in public. For those that are about to flame me for acting in a way that would limit the rights of others, bear in mind that there are many other instructors in this area, and I know that at least some of them will sign off on almost anyone. My classes are the most expensive that I am aware of in this area, and I feel and have been told that they are the most extensive. All of my clients are informed, in writing, that the requirements to achieve a passing grade from me are far above the state mandated requirements. I may not turn out as many permit holders as other instructors, but I truly believe that my clients are better prepared to exercise good judgment and superior skills compared to the average of many other instructors. That is my goal, and I am currently booked through June of next year with no advertising other than word of mouth.