Because Baldur's Gate with a number atached to it is the name of the franchise,not the city anymore in terms of games,that's why SoA is not in that city but is still a Baldur's Gate game of the same franchise. If you don't want a game that takes places on the city of Baldur's Gate be related to the BG franchise you name it with another name (not with the number) like Baldur's Gate:Dark Alliance or Baldur's:Gate Descent to Avernus.
Small correction: You mean that the Baldur's Gate referred to with "Baldur's Gate 3" is the name of the series, not the franchise. The franchise is everything under the parent umbrella that the Baldur's Gate series is a part of, and includes Dark Alliance and Descent Into Avernus.
It's noteworthy that Larian's "Baldur's Gate 3" not only has nothing in common or relation either in narrative, characters, gameplay, or visuals to the Baldur's Gate series, but it literally is officially the sequel to Descent Into Avernus. Larian's "Baldur's Gate 3" is officially not a sequel to Baldur's Gate 2, but to Descent Into Avernus.
And it shows that there is not even the faintest relation or familiarity between Larian's "Baldur's Gate 3" and anything that Baldur's Gate 1 and 2 represent. So, why is Larian calling their game "Baldur's Gate 3"? They are literally lying by doing so. It is false marketing. And since the only purpose for it can be to capitalize on Baldur's Gate series fans' hopes and excitement at getting another Baldur's Gate game (which they are not getting with "Baldur's Gate 3), the dishonest use of the Baldur's Gate series name by Larian is literally a cash-grab. It is actual fraud because every single sale that occurs directly as a result of the game being called "Baldur's Gate 3" is money that Larian tricked somebody into given them with a lie.
There is no connection to the Baldur's Gate series in "Baldur's Gate 3". That means it isn't a Baldur's Gate series game. Larian's upcoming game is a D&D RPG using the D:OS2 looks and formula which Larian are copy and pasting into a Forgotten Realms setting... but it isn't a Baldur's Gate. Not technically, not narratively, visually, certainly not gameplay-wise... nothing, absolutely nothing about it is associable with the Baldur's Gate series and what the series' name represents.
So, calling it "Baldur's Gate 3" is truly a lie and fraud. The name must be changed. Larian could not change it, just like a person could rob someone and not refuse to acknowledge any wrongdoing on their part. But, where ethics matter, the name of Larian's game must be changed.
First thought: As many have mentioned, it was a somewhat unfortunate decision to call this game "Baldur's Gate III". At the end of BG2, it is mentioned that this adventure is over, but others will follow, so it would have been possible to continue somehow. The Maincharacter is having a romance, a child is born, bla bla bla. The story could have been continued considering Baldur's Gate: Descent in Avernus. The only common ground to the predecessors is the setting in the Forgotten Realms in and around the city of Baldur´s Gate. Unfortunaly nothing from the predecessors will be continued but what the title "III" implies. Since the outcry was predictable, I wonder why it was done anyway. Maybe Swen/Larian Studios had no choice. It is no accident that WotC released a new campaign for the Dungeons & Dragons tabletop game: Baldur's Gate: Descent in Avernus last year when Baldur´s Gate III was announced. It tells what's happened since Baldur's Gate II and plays 100 years after Baldur´s Gate II. It could be that the title "Baldurs Gate 3" was certainly a mandatory requirement for the game from WotC. No Baldur´s Gate 3, no licence. In this case Swen had no chance to name the game "Baldur´s Gate: NamedItWhateverYouLike". Maybe it was just a strategic sales decision. We don´t know and maybe will never find out due to contractual regulations.
Second thought: But to be honest, we know almost nothing about the story except the outer frame. How often history has changed in BG1, SoD or BG2 and pushed us in another direction. How many times have we been surprised? Swen is definitely not going to reveal what the whole story looks like. All information is currently based on a few interviews, a demo and a bit of gameplay. The information available is also interpreted differently. We know almost nothing at all and therefore nobody can not really judge at this point whether Baldur's Gate 3 deserves the name or not.
I personally believe that Baldur´s Gate III will not be a D:OS clone and that a lot of the presentation was just placeholders, borrwed by D:OS. I think we will see and hear a completely different and independent Baldurs Gate UI, spells and sounds. Larian Studios will definitely create an own Baldur's Gate atmosphere.
I think Swen is well aware that the Damocles sword hovers over him and Larian Stuidos.
Finally, it should also be noted that we can make our own story with our imagination, like in a pen&paper game. My character will be a half elf because it is the son of my main character from BG1 + 2 and Jaheira. For me, the story continues anyway...