So, there are zillions of Axis-wanks where Spain joins the Axis for no good reason. They generally founder on the problem that Franco had zero interest in joining in another major war.
This thread isn't about that; handwave away Franco dying in June 1940 and being replaced with someone fanatically pro-Nazi, if you wish. The POD doesn't matter, and can involve ASBs if you want. The key is, the Allies still win the war (sorry, but Spain isn't THAT important), and now it's time for the country to rebuild.
Assumptions:
1) The Canaries were occupied by the Allies sometime after the declaration of war; Spanish Morocco fell during the North Africa campaign, Spanish Guinea somewhat earlier.
2) The Western Allies invaded Spain in '44, either from France across the Pyrenees after Overlord, or through a separate, Dragoon-style invasion of the Mediterranean Coast.
3) Once the Allies have entered Spain and the writing is on the wall, Portugal declares for the Allies.
Now that all that is out of the way, comes the real question: what happens to Spain afterwards? Too many of the Republicans were tied to closely to Moscow for the Western Allies to be comfortable with them in charge (to say nothing of what Salazar would think). The wounds of the Civil War are still lingering. The various remaining Spanish colonies are also a concern.
So, who governs, and what does Spain look like?