Spanish sleeping habits predated Franco by quite a bit, it's mainly due to the weather in Spain being quite hot during midday and early afternoon.
As for Franco and Hitler, Hitler desperately wanted Spain to join the war but the Spanish were rebuilding their armed forces badly after the Spanish Civil War (which ended just a few months before the outbreak of WWII) but the real coup was British Intelligence. Franco was concerned that if Spain joined the war they'd be completely reliant on Germany for material and defence, which would make Spain effectively a vassal state to Nazi Germany and as much as he liked Fascism, he knew that would end badly for him. the SOE (Special Operations Executive) and SIS (Secret Intelligence Service, later MI6) worked to keep Spain neutral during WWII by playing on Franco's paranoia intimating that Spain would be immediately invaded if they joined the axis and the remnants taken over by Germany.
So fearful was Franco of being deposed that when he discovered the British SanMigel intelligence network thanks to the Gestapo, he negotiated with the British to allow them to continue as long as they did not act against Franco's regime.
There was a battleground in Spain in WWII but hardly a shot was fired on it because it was between British and German spies. It was a decidedly one sided battle at that, we fed the Germans so much bad intelligence that they simply believed, not the least of which was Operation Mincemeat and the German intelligence leaders in Spain were so incompetent that they were practically working for us, Admiral Wilhelm Canaris was so effective at keeping Spain out of the war British intelligence thought he might be trying to be a double agent (he wasn't but was executed in 1944 for anti-Nazi resistance).