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Franchising is less based on how good a team has been, but rather how stable the org has been and will continue to be. Riot does not value individuals or squads, but rather the corporation, which is why Sen was picked up for example. No matter how bad MIBR (for example) would perform, theyd still have a higher chance of remaining part of franchising than EG even if they win another champs. Another example for this is how OPTC was not in franchising, due to their conflicts with RIOT in league, and how Faze weren't in either due to falling economy.
This means that the relegation system DOES exist, just not based off performance.
As time goes on and more teams grow, this gap should distinguish, as the only reason it exists right now is because the t1 player pool is considerably less so orgs need to more or less gamble on the correct players to get and work with (which doesn't always turn out right). Now, I do see really badly performing teams maybe getting a warning to get serious, but considering how much money is put into a pro team, I doubt they are messing around. Also, since this is all expensive, the whole gambling on right players is even more stressful now.
Riot's entire plan is based on the future years, the issues with extended off-season, lack of games and improper structure is supposed to get fixed as more and more teams from franchising get added; I don't really like this though.