Does Franko have permission from the copyright holder to distribute Workbench disks?
If he doesn't, it's illegal.
It's really as simple as that.
I think he would say yes. I think he bases it on documentation from various Commodore sources, up to and including Petro. There is various source supporting that Commodore basically considered the Workbench free to distribute and ended up letting anyone include the files on disks and eventually CDs. The thought being, you already own OUR machine and OS, so you aren't copying anything anyway! Duh! They sold ROMs and they sold physical disk and manuals, but distribution and copying was fine. The entire disk themselves were released for some versions to public domain as well.
So yes, I believe Franko "believes" he has permission and "legal" right to have the disk available for legal owners of the OS to download and make backups.
Does he have the legal right? I DON'T KNOW? Do you know. No you don't.
The only one that would know may be the Copyright holder! If they disagree. (Which as this point they haven't said they do). Then they could either tell Franko, or his ISP, or just take him to court.
So far it appears the Copyright holders agrees that Franko does have a right to distribute the disks. Who are you to say otherwise exactly?