Actually don Juan's agreement with Franco did not accord that the restoration would be done in the person of Juan Carlos. Up until the day that Franco named Juan Carlos as his successor with the title of King.
When news of Franco's choice was received at Villa Giralda, don Juan's home in Estoril, Portugal, it was like thunder for him and his political cabinet. Furthermore it led to years of very tense relations between Juan and Juan Carlos.
Queen Victoria Eugenie when meeting Franco in 1968 for the baptism of Felipe urged him to choose a successor, either Juan or Juan Carlos, but above all she wanted the monarchy restored. The choice was announced after the Queen's death.
Doña María de las Mercedes, Juan Carlos' mother, played an important role in getting don Juan and Juan Carlos to bridge their differences - she went into detail about this in her memoirs. This led to don Juan's renunciation in 1977, thus restoring the dynastic old line by making Juan Carlos the "official" Head of House, as well as King.
I think don Juan, as Juan III, would have made a fantastic King. Juan Carlos himself has been extremely good and it will be heard for Felipe to follow in his father's footsteps.
Arturo Beéche