Here's the thing with the responses you're going to get all kinds of varying answers on this forum.
That being said, I've never washed my flannel prior to making rag quilts. I've made many. They all shrink. I've also never had a bleeding issue to date. I do wash in cold water. I've straight stitched 1" in from the edges. You get what you pay for with regards to the cheaper flannel. I've only had one friend say that the flannel in the rag quilt she made actually tore after a few years. I don't know how hard her daughter was with the quilt though. Not the most gentle of children, if you understand. I've had rag quilts for over 10 years that have not torn, and we use them all the time.
Do make sure you reinforce any stitching that may have gotten accidentally snipped. If you don't, you'll see a lot of ragging that makes it's way to the seemed side of your quilt. It's just more of a challenge to tuck back through and stitch closed after it's been washed and dried. Make sure you clean your lint trap often if doing at home. I set my timer for every 5 minutes! Good luck.