Argh, I seriously doubt Franco would've taken his blemished country into war, the only realistic alternative is a deal after the fall of France. The idea was conceived by Franco and Hitler, but was never implemented. Mostly due to material constraints.
This is sort of ASB, provided the United Kingdom is still in the war.
If the UK is crumbling or is under some sort of sustained aerial attack, i.e. the destruction of the RAF, then I think he would've capitalized and seized Gibraltar. Spain, like that of many other Axis-aligned powers will probably face no major territorial loses that will be a slap in the face. Sure, they would lose Gibraltar, but what else is there to take?. Spanish Morocco will likely be shifted to the administration of French North Africa and its rump colony in Africa.