There's a few answers in our FAQ on Spain's neutrality, including one of my own that speaks to this debate. It's not a question with a straightforward answer, but I personally would lean away from it being a deliberate manipulation on Franco's part. I'm not sure I'd characterise it as overplaying his hand, but rather that the negotiations reflected the reality that there was no happy medium to reach in 1940-1 - the compensation Spain required to make entering the war 'worth it' was far more than their participation was worth to Germany.