Um, I'm not sure I agree with you that Franco ever seriously contemplated joining the Axis powers as a fighting ally; notwithstanding the Spanish 'volunteers' on the Eastern Front. My reading of Franco is that he was quite cunning in playing off the the two sides, as evidenced by the very expensive pay-off that Britain gave him to stay officially neutral; and of course, by 1943 there wasn't any question, as anybody could see which way the wind was blowing
Hitler didn't give him what he asked for, therefore it felt it was better to sit the war out and cut a deal with the allies postwar. Well, that and Canaris informed him that he thought Hitler was going to lose.