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LiudmylaSupynska/iStock/Getty Images. In its broadest sense, a franchise agreement is a legally binding contract between a franchise organization and a franchisee. The agreement specifies the rights and obligations of each party, as well as what activities are prohibited.
The purpose of the Franchise Tag is to allow teams to protect their most important assets from simply leaving the team upon free agency, which is beneficial for small market teams who often see big name players move to big city franchises. In 2013, the cost to franchise tag a player was: