When you think about this, it's absurd. If a franchise does well, then surely you keep the studio and milk it even more?
What actually happens is that the profit margin is incredibly thin, as games get more expensive to produce, yet still bring in a fixed amount of money. The board of directors don't like this, so the developers become the scape goat, and the studio gets shut down to try and recoup costs. Reasons for the massive costs of games is due to shareholders and big wigs trying to be game developers, causing incredibly expensive U turns (which are not easy and very costly especially in a game where its architecture has already been defined), trying to add more features into a frame work doesn't support it etc.