My personal choice and suggestion is NO. Playing chess is not only about winning or losing games, but also about building character. Continuing fighting under bad start is how we learn to persevere in unfavorable situations. If your child quickly admits defeat and retreats, s/he might get into a bad habit, quitting easily if an endeavor is not smooth. S/he will perform great when all stars perfectly line up, but will get crashed in real life which is tough sometimes and not perfect.
The worst case for your child to finish the tournament is that s/he loses all the remaining games. But the tournament is already bad, withdrawl will not make it any better. Losing more will not make it much worse either. If s/he wins a few games in later rounds, s/he can regain some confidence and recover a little on the spot. S/he will be ready for the next tournament.
Some parents are worrying that their children will be mentally crashed and quit chess forever. Most times it's not happening. Children are much stronger than we think. In fact, parents are the ones who get crashed first. Sometimes they feel losing face because of their children's lose. That will be a big problem in the long run, for both the child and the parent.
My daughter has had a great share of bad tournaments, but she never asked for withdrawal. She always sits back to the board, and plays the next game. Here is one example:
55 | ALICE DONG |2.0 |L 3|L 27|L 57|B 0|L 42|W 69|
NJ | 13398051 / R: 1659 ->1611 | | | | | | | |