Franco was a monarchist in the sense of being against the republic, but after the civil war he continued to be head of state - as a "regent" of the Kingdom of Spain. (Hence the "Caudillo de España por la Gracia de Dios" title which can also be found on the coins.) His idea was that, after his death, a king would become head of state. However, it seems that Franco considered the "rightful heir to the throne" - Juan de Borbón, Count of Barcelona - to be too liberal to continue the authoritarian regime. That is why (in 1970 or so) he decided that Juan Carlos would be king and his successor.
Unfortunately from a Franquist point of view, Juan Carlos turned out be a supporter of democracy. What certainly made him quite popular was his position during the (failed) military coup in 1981. Obviously the post-Franco head of state had different ideas.
Christian
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