Goldstein
Banned
Why the republican side changes his flag to the monarchist/nationalist one?
Why the nationalist side use the phalangist flag?
Interesting idea, thought.
PS: Oh, I see. That's how OTL spanish civil war happened. Sorry.
Well, to have a divided Spain, it would take for the republican side to receive more military support, but not enough to give them a clear advantage. The stalemate in the war (Maybe around the Ebro) would lead to exhaustion, and would make urgent to sign an armistice, and also would make implausible for both sides to join WWII. It's almost sure in that case, the republican side would turn stalinist.
That result has only a problem. The nationalist side was a rabid defender of the "unity of the fatherland", which was one of the excuses for their insurrection. So, probably they would never accept a divided peninsula. Anyway, it could happen that the war exhaustion makes it the only possibility, and then the nationalist side uses the "Red atheists have broken our country as we told you" propaganda.
Finally, that result probably butterflies Franco rise to power. Problably, the nationalist side would eventually turn into a more "conventional" military junta. I can't help but think about Korea while I write this.