I think I've run three or four AWC tournaments now and have had anywhere from 3-5 fighters per team. All come with their own issues.
Personally, I think for legitimacy, it should be five fighters per team but then most alliances wouldn't be able to field that unless you allowed some managers to have two fighters each
Three fighters per team is probably the most realistic but even then you might have to allow two fighters per manager. Four fighters is fine but then depending on the format, you open yourself up to ties.
Wouldn't recommend allowing multiple teams per alliance however. More teams are always better but in my experience this was the biggest mistake I've come across.