When you buy coffee at Starbucks in Tokyo, when you eat a burger at McDonald's in São Paulo, when you order pizza at Domino's in London — you are participating in a global system that runs on the dollar.

Global franchising is an industry worth more than $1 trillion, and a significant portion of its financial flows are denominated in US currency.

McDonald's, Starbucks, KFC, Subway, Domino's — all these companies are American, and their franchise agreements, royalties, and supplies operate in dollars. Even when the franchisee is in India or Nigeria, they pay royalties in dollars. Franchising is another invisible pillar of the dollar, about which almost nobody talks.

Why franchising works in dollars

Franchising is a model in which the franchisor sells the right to use its brand and business model to independent entrepreneurs. McDonald's, Starbucks, KFC, and other American companies use this model for global expansion.

The reason franchising works in dollars is simple: franchisors are American companies. Their contracts with franchisees are denominated in dollars. Their royalties — a percentage of revenue — are often calculated in dollars. Their supplies — equipment, ingredients, packaging — are purchased

For the United States, franchising is not only McDonald's and Starbucks. It also includes banks that service franchisors. JPMorgan, Citigroup, Bank of America — all of them work with the largest franchising companies. This creates additional flows of capital in dollars.

For the dollar, franchising is a steady source of demand. Even if other factors weaken, franchisees will still buy dollars to pay royalties and make purchases. This makes the U.S. currency more resilient than one might expect.

For developing countries, franchising is a challenge. Entrepreneurs are forced to buy dollars to pay royalties and equipment. This puts pressure on their national currencies and increases dependence on the dollar.

What this means for the dollar

Franchising is an inconspicuous but important pillar of the dollar. It creates steady demand for the U.S. currency that does not depend on Fed rates or geopolitics. As long as global franchising grows, the dollar will receive support.

However, this pillar has a weak spot. If China or other countries create their own competitive franchising networks and promote them in yuan, it could undermine the dollar's monopoly in this sector. China is already developing its own restaurant and coffee shop chains.

As analysts note, "franchising is an industry where the dollar feels especially confident." But this confidence could weaken if competition intensifies.

What this means for the average person

If you buy coffee at Starbucks or eat at McDonald's, you are already participating in this system. Your money for coffee and burgers is converted into dollars and supports the U.S. economy