With roughly $4.9 million in available salary cap space, the Leafs do not have enough room to sign both players; they'll either have to deal Franson or another player or two to fit everyone under the cap.
"There are a few options we have to deal with," Kadri told the Sun. "Really, it's just a battle for them trying to work players in. I think (my agent) is being pretty reasonable and we're taking that (Leaf cap) into consideration."
Kadri, 22, would like to sign a long-term deal with the club, but it's possible he only signs a one-year or two-year deal, as the cap is expected to jump back to the $70 million range for the 2014-15 season.
While dealing Kadri isn't an option for Toronto, the team has explored trade possibilities for Franson, though they'd like prefer to keep him.
"Franny and I believe we can be pretty big pieces. We both want to be here for the long run," Kadri said. "How ever way we can make it work, hopefully we're willing to. But it's really none of our business as players. You go out there, perform and put yourself in the best spot possible for when these (contract) situations come up."
Kadri, a native of London, Ontario, finished second on the Leafs in scoring this past season, registering 18 goals and 26 assists for 44 points in 48 games.
Contract talks might not heat up until training camp, which begins on Sept. 11.
"The closer and closer camp comes, the more of a distraction it is to me," Kadri admitted. "But I'm confident we'll come up with something. I know both parties want to get something done, it's just a matter of them getting some things together and putting the team back where it was. We have a solid foundation, a great group of guys and no one wants to leave."