i use a bracket that extends out and back from the seat bolt. it puts the flag about six inches behind your seat and along side the rear fender. it is out of the way and does not require any drilling. i've used it several times with no problems. a buddy used to make them and sell them through the shop he works for. if you want one, let me know and i'll see if he still does it.
some mount them on their axle, not a good location. do you really want a flag whipping up and down around your rear wheel?