This was Joshua's first win since 2020 after successive defeats by Oleksandr Usyk, and another loss could have potentially ended his career.
The judges' verdict meant Franklin had suffered the second defeat of his 23-fight career.
Despite repeatedly landing with his left jab and catching Franklin with several powerful rights, Joshua was unable to knock him out.
The fight ended on a bizarre note when the 12th and final round appeared to end eight seconds early, with Joshua pushing his head into Franklin.
The move sparked an angry reaction from Franklin's strength and conditioning coach Lorenzo Adams, who pushed Joshua.
The boxers and their corners clashed momentarily after the final bell before security stepped in to calm the situation.
"I should have knocked him out but it is done. On to the next. He is here to prove himself, not roll over. I wish I could have knocked him out," said Joshua.
He also expressed his interest in fighting Tyson Fury, saying "I know who they want. They said Tyson Fury; the ball is in his court.
"I would be honoured to fight for the WBC heavyweight championship of the world. If he's listening, he knows my promoter; we've had dialogue before, so let's continue this.
"We ain't getting any younger." Eddie Hearn, Joshua's promoter, added that they would be willing to entertain conversations to go straight into a Tyson Fury fight in the summer.
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