I've washed lots of flannel and don't stitch off the ends.
Yes a little raveling, but nothing horrendous!
I hot wash and hot dry it at least two times to help deal with the shrinkage.
If there is a colour bleed issue ... then Retayne!
GailG ... I've had hard flannels turn soft as can be with washing/drying ... and soft ones go limpy and miserable. Likewise the pilling seems to be a mystery. I'm guessing it's the quality but I have yet to figure out how to know what. It's certainly not determined by the price. Another good reason to wash first ... at least you know you are not happy with it now, before you put a lot of work into making something.