It so happens that, this year, the first division of the county championship comprises all of the 8 counties with Test venues. (I exclude Glamorgan because that seems to be a political deal.) The only exception is Somerset.a working party has presented proposals to the counties to be agreed at a meeting on march 7th. (espn cricinfo) apparrently the counties are retained so the franchise idea has been shelved. from 2017 promotion and relegation in 2 divisions, the top 8 teams reaching the quarter final this season will form division 1 along with a 9th county from a play off. it is not yet decided whether it wil be 2 up and down or 1........ so if we want to be in div 1 we need a top class t20 player to help us out.
I rather suspect that the ECB would like these 8 (richer) counties with big grounds to become the elite T20 teams. We would have Durham, Yorkshire, and Lancashire in the North. Nottinghamshire and Warwickshire in the Midlands. Middlesex and Surrey in London. And Hampshire in the South.
Unless T20 games can be played at football stadiums with drop-in pitches, I cannot readily see that a city-based franchise system would work without the involvement/co-operation of the county cricket clubs who play at these larger venues.
Conversely, I cannot see how some-one could readily bid for a franchise that displaced one of these 8 teams.
Perhaps a 10-team system would be viable - in which case Glamorgan would presumably become the 9th team.
Perhaps some other teams could combine? Say Gloucestershire and Worcestershire? Kent and Sussex? Derbyshire, Leicestershire and Northamptonshire? Somerset with Devon and Cornwall? Essex to cover East Anglia? I cannot see that all happening in a hurry - to put it mildly. Perhaps all these counties, as at present, or some combined, could have an annual 2nd division competition whose winner joined the top 9 for the following year only.
To my mind, the concept of a city-based franchise system for an elite T20 competition would be horrific if it were to displace all the counties - because it would ruin them financially and thus end the county championship. However, I can't really see how such a franchise would work without the participation of the 8 counties with the bigger grounds.