I train with two very different clubs, one which has the McDojo reputation, and the other which is undoubtedly legit. I think the McDojo label was given to GKR back in the day when very low grades were given instructor belts and asked to open dojos. I can't speak for other places, but here in Auckland that's not commonplace at all. They do issue instructor belts, but they must work as sempai for a long time before being allowed to run a dojo, by which time they are very close to shodan themselves. From memory they must train once a week in a regular class, once a week with the black belt class, and sempai one class per week, as a minimum.
Grading here is conducted monthly in front of a panel of around 6-8 senior black belts (not kyu grade instructors). Depending on numbers and grades, the session will be split into groups. All grades will show basic kihon together, and each group will be tested for their kata and advanced kihon relevant to their grade. The first grading is a given, and the test is really just to see that the student is trying and not messing around. From that point on, the gradings get longer, harder, and more picky.
My ten year old daughter recently failed her 5th kyu grading because her kata (Saifa) wasn't up to scratch. Most people fail their first attempt at 5th kyu, as it is the "perfection" grade, if you will. There are no new techniques, no new kata between 6th and 5th, it's just refinement, refinement, and more refinement. I was watching from nearby, and although this may sound like a doting dad, her hand techniques looked better than the nidan stood directly in front of her. The kicks not so much. She was testing alone, as the highest grade. All of the grading panel had scored her basics as excellent, and several parents came over to comment on how good she looked. Unfortunately for her, when she came to kata, it was all eyes on her, and a few old habits snuck in. According to the man in charge, she needs to wait a minimum of two months to iron out the flaws before trying again.
I also train with a local Kyokushin club, where it appears that lower level grades are awarded when students reach the required standard in class. As I'm only a visitor, I haven't yet signed up to start the journey with them yet, but that will happen soon.