What Is Franchising In Esports?

Franchising in esports is becoming increasingly popular, but what does it actually entail? In this blog post, we’ll take a look at what franchising means for esports teams and players.

Introduction to Franchising in Esports

Just as traditional sports have leagues with teams that are owned by franchises, so too does the world of esports. Franchising in esports refers to the process of teams being sponsored and supported by organizations, with the goal of building long-term stability and sustainability in the league. In this article, we’ll take a closer look at franchising in esports, including its history and how it works.

What is franchising in esports?

In franchising, a business owner (the “franchisor”) licenses the rights to their business model and brand to another party (the “franchisee”). The franchisee pays an initial fee and ongoing royalties to the franchisor, and in return they receive the right to use the franchisor’s intellectual property, business model and brand name. Franchising is a popular way to expand a business, as it allows the franchisor to retain control over their brand while delegating day-to-day operations to the franchisee.

Esports is a rapidly growing industry, with new franchises popping up all the time. Many of the biggest esport leagues, such as the Overwatch League and the League of Legends Championship Series, use a franchising model. In these leagues, teams are owned by individual investors or organizations, and each team pays a hefty franchise fee to join the league. Franchising has several advantages for both leagues and teams.

For leagues, franchising provides a steadier stream of revenue than other models such as tournament sponsorship or pay-per-view broadcasts. It also gives leagues more control over their product, as they can dictate rules and formats to their franchises. This control ensures that all teams are on an even playing field, which in turn makes for a more competitive and entertaining product for viewers.

For teams, franchising gives them long-term stability and security. It also provides valuable exposure for team sponsors, as each team logo is prominently displayed during league broadcasts. Franchises also have access to league resources such as player development programs and financial support for facility upgrades.

While franchising has numerous benefits, it also comes with some challenges. The biggest challenge is the high cost of entry; most esports franchises have paid tens of millions of dollars just to join their respective leagues. This high cost can make it difficult for new organizations to break into the market. In addition, franchised leagues can be slow to adapt to change; because each team has a vested interest in maintaining the status quo, it can be difficult for them to agree on new rules or formats that could shake up the league hierarchy.

If you’re thinking about getting into esports franchising, doing your research is essential. Make sure you understand all of the costs involved and consult with experts in the field before making any commitments.

The benefits of franchising in esports

Franchising in esports can offer a number of benefits to teams, both in terms of stability and long-term security. For example, by franchising, teams are able to lock in their spot in a particular league for a number of years, which can help with planning and stability. In addition, franchising can also help teams to attract sponsors and investors, as it can offer them more certainty about the team’s future.

However, there are also some drawbacks to franchising in esports. For example, it can be expensive to buy a franchise spot, and it can also limit a team’s flexibility if the league decides to make changes. In addition, franchising can also create a more “closed” ecosystem in esports, which some people may not like.

The Different Types of Franchises in Esports

Franchising in esports is when a professional esports organization buys a slot in a league, such as the LCS, from the developer of the game. This gives the team some security and stability in the competitive scene. There are three different types of franchises in esports: full, limited, and provisional. Franchising is not without its criticisms, as some say it takes away from the grassroots and open nature of esports.

City-based franchises

City-based franchising is the most common type of franchising in esports. In this model, teams are based in and represent specific cities. The most notable city-based franchise in North America is the Overwatch League, where each team represents a different city, such as the Los Angeles Valiant or the New York Excelsior. This model is also used in traditional sports leagues, such as the NBA, NFL, and MLB.

City-based franchising has a few advantages. First, it helps with branding and marketing. When teams are associated with specific cities, it gives fans a team to root for that they can identify with. Second, it makes it easier for teams to secure local sponsorships. Third, city-based franchises tend to be more stable than other types of franchises because they’re not as reliant on the success of a single player or coach.

However, city-based franchising also has some disadvantages. First, it can be expensive to purchase a franchise in a major city like Los Angeles or New York. Second, it can be difficult to get fans to attend games if the team is not based in a major city. Lastly, city-based franchises may have difficulty attracting top talent if players prefer to play for teams in other cities.

League-based franchises

League-based franchises are the most common type of franchising in esports. In this model, esports leagues sell permanent membership spots to organizations (or “franchises”) for a hefty price tag. For example, the Overwatch League sold its inaugural season spots for $20 million each. The Call of Duty League is selling its franchises for $25 million.

The main benefit of league-based franchising is that it allows esports leagues to generate a lot of revenue up front. This revenue can then be funneled back into the growth of the league and its supporting infrastructure, such as player salaries, facilities, and broadcast production values.

The downside of league-based franchising is that it limits the ability of new organizations to enter the space. This can create an oligopoly—a small group of businesses that control the market—which stifles competition and innovation.

Team-based franchises

Team-based franchises are the most common type of franchise in esports. In this type of franchise, teams are given the exclusive right to compete in a particular esports league. The team is then responsible for managing all aspects of their team, including player contracts, staffing, and marketing. This type of franchise is similar to traditional sports franchises, such as NFL teams.

There are several benefits to team-based franchising. First, it allows teams to build long-term relationships with their local communities. This can be extremely valuable for promoting the team and generating revenue. Second, it provides stability for teams and players, which can attract more investment and talent. Finally, it gives teams greater control over their own destiny, which can lead to a more successful organization overall.

The downside of team-based franchising is that it can be expensive to buy into an existing league. In addition, there is no guarantee that a team will be successful even if they are given an exclusive spot in a league. Lastly, team-based franchising can limit the ability of new teams to enter the competitive scene.

The Pros and Cons of Franchising in Esports

Franchising in esports can be a great way for teams to secure their spot in a league and have more stability. It can also help with team branding and marketing. However, there can also be some downsides to franchising. Let’s get into the details.

The pros of franchising in esports

Franchising in esports has a number of advantages for team organizations, players, and fans.

One of the biggest advantages of franchising is that it adds stability to the league. In traditional sports leagues like the NFL, NBA, NHL, and MLB, franchises provide stability and certainty. Fans know that their favorite team will be around for at least several years, and this continuity is one of the things that makes sports so special.

Franchising also allows teams to build a long-term relationship with their city and fans. In traditional sports, teams often have deep roots in their community. This is less common in esports, where teams are often based in different countries or regions and may not have the same connection to a specific city or fan base. Franchising gives teams the opportunity to develop this kind of connection.

Another advantage of franchising is that it allows teams to invest more in their infrastructure and build a stronger organization. In traditional sports, franchises have access to resources that allow them to build strong front offices, training facilities, and support staff. This gives them a significant competitive advantage over non-franchised teams.

Finally, franchising gives players more security and stability. In traditional sports leagues like the NBA and NFL, players are guaranteed a certain amount of money each year regardless of whether they are cut from the team or traded. This security doesn’t exist in most esports leagues, where players can be released at any time without any guarantee of being picked up by another team. Franchising gives players this kind of security and can help attract top talent to the league.

The cons of franchising in esports

While there are many benefits associated with franchising in esports, there are also some potential negatives that should be considered. One of the biggest concerns is the possible financial risk involved. Franchises typically require a significant upfront investment, and there is always the possibility that the team could fail and the investment would be lost.

Another potential downside is that franchising can create a more exclusive and insular environment within the esports community. For example, if all of the top-level teams in a particular game are franchised, it could be harder for new teams and players to break into the scene. This could ultimately lead to a decline in popularity for the game as a whole.

Finally, it’s worth noting that not all games are well-suited to franchising. Some games simply don’t have enough of a following to support multiple teams, and others may not have enough structure or organization to facilitate a franchise system. Before investing in an esports franchise, be sure to do your research to make sure the game is a good fit for this model.

The Future of Franchising in Esports

Franchising provides esports organizations with a more secure financial backing, as well as a higher level of organization and stability. In return, the franchisor is able to better control the esports scene and the teams within it. Franchising is also seen as a way to legitimize esports as a whole.

The continued growth of franchising in esports

With the introduction of franchising into the North American League of Legends scene in 2017, franchising in esports has continued to grow in popularity. Franchising provides many benefits to organizations, including stability, long-term planning, and increased revenue streams. As a result, we’ve seen many more organizations move to a franchised model in recent years.

Franchising in esports is still relatively new, and we’re still learning about what works and what doesn’t. However, the continued growth of franchising shows that it is here to stay. In the coming years, we expect to see even more organizations move to a franchised model as they look for stability and long-term success in the ever-changing world of esports.

The potential for franchising in other esports

Franchising has long been a mainstay in traditional sports, providing a more stable and predictable model for teams and investors. In recent years, franchising has become increasingly popular in the esports industry as well, with many leagues adopting similar models to traditional sports. But what does franchising mean for other esports?

For one, it could provide greater stability for teams and investors. Franchising also has the potential to help certain esport titles grow and develop in a more structured way. Ultimately, whether or not franchising takes root in other esports will come down to the individual games themselves and whether they are suited for this type of model.