That's a good question! (Ever notice people say that a lot when they don't know the answer?
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The only advice I can give you is to experiment with a small test league, one that can be quickly simmed over a number of years, to see how it handles auto-expansion. To that end, pay attention to the AUTO REGION setting, as shown below.
When you set up a fictional league and use this setting, it will suggest certain teams based on what you selected. For example, the game suggested all of these teams which are rated baseball quality three and above. I am thinking that, when the time comes and you have this setting in place, it will replicate the selection process as to which country gets rewarded the new franchise(s).
Or, it may be that the Nation selection, England, will govern and all new franchises will be of that nation. That's where some testing will be useful.