What is a "franchise tag"?

A franchise tag is a designation used by NFL teams to retain a player who is about to become a free agent, ensuring that the player remains with the team for an additional season under specific contractual terms. By applying a franchise tag, the team can offer a one-year contract that pays the player either a predetermined salary that is the average of the top five salaries at the player's position or a figure that meets a certain established threshold, whichever is higher. This mechanism allows a team to secure the services of a key player without committing to a long-term contract immediately, while also giving the player the chance to negotiate a better deal if they perform well.

The other options relate to different aspects of player contracts and trades but do not accurately capture the function of a franchise tag. A multi-year contract for a superstar player implies a long-term commitment rather than a temporary retention method. A trade agreement suggests a completely different function, where players are moved between teams. A salary cap exception for veteran players describes a different concept related to managing salary cap space and does not pertain to the retention of a free agent.