Okay, franchise tag is ....a player and you are having a difficult time coming to a long term agreement, or maybe you are a little weary of giving him a long term contract with big money. So you franchise him, meaning you pay him the average of the top 5 paid players at his position. This is a one year contract, that is guaranteed. It gives you the ability to retain his rights, and not dish out big money over a long term period. Also, if a team wants to sign him as a free agent, they must give you 2 first round picks in compensation if you allow them to sign him....however in Madden I think its a 1st and 2nd round pick, but I'm not for sure there. Basically you're making a trade, with the other team.
As far as cap penalties clearing, you cannot clear cap penalties in the NFL. I'm not sure why the allow you to do so in Madden.