I understand that it's in case they need a stand in for whatever reason but isn't that essentially tier 1.5 jail? It's all the best players that were on the edge of actually playing on the team, at least if they were on non franchised teams they would play the game but instead they are gonna sit on the bench not improving.
It seems like a problem where it's difficult to grind up to tier 1 since if you get close to good enough you have to sit on the bench and do nothing while others improve, making you relatively worse making you go back to tier 2.