Unlike a standard cripple wall, balloon framing does not have a top plate to which the plywood can be nailed. Split level homes such as the one shown above, which were common in the thirties and forties, as a rule have balloon framing because the main lower floor is nailed to the side of the garage wall. In other words, first they built the garage with the room above it and then nailed the floor of the main house to the side of it.
Balloon framing comes in many configurations and requires very specialized retrofit techniques that cannot be found in any of the available retrofit guidelines. These homes actually require two retrofits, one is to attach the main floor where the living room and kitchen are to its foundation. The other is to attach the living area above the garage to its separate foundation. The lower floor is relatively cheap. The upper floor, called a soft story, is quite expensive.