Some (not all) teams use the franchise tag for one player who is about to become a free agent. It guarantees that player will be paid no less than the average of the top 5 earners on the team and prevents them from entering the free agency market. Each team can only have one, and each tag only lasts for one year. A player doesn't need to accept it, but it guarantees them to be well paid the following year, and also allows teams to sort out salary cap issues and maybe hold off having to sign the player to a huge new contract for a year in certain years when they have alot of contracts to sign and are close to the cap.
If you have 2 or 3 star players out of contract it is beneficial to have one of them as a franchise player and focus on signing the other two players, whilst guaranteeing the FP a good wage. The following year you can then try and sign the FP to a new deal and maybe put another player on the tag.