Franjic hurt himself just after the interval in Australia's 3-1 Group B defeat to Chile on Friday, and subsequent scans found a tear in his right leg.
Early goals from Alexis Sanchez and Jorge Valdivia put the South Americans in control but Tim Cahill led a superb fightback, equalising before half-time and seeing another goal disallowed for offside.
However, Ange Postecoglou's men could not find a way through as Jean Beausejour's late effort clinched a crucial win for Chile.
Franjic's injury is a further blow to Postecoglou, who is likely to call on Ryan McGowan - a centre-back by trade - for the remainder of the tournament.
The Brisbane Roar man remains positive despite the setback though, and has backed his team-mates to impress in daunting fixtures against the Netherlands and Spain to come.
He posted on Instagram: "Shattered to get the bad news that ends my @fifaworldcup but I would not change anything for the world.
"Everything happens for a reason in life and this will only make me stronger.
"I will be standing by the boys all the way and still believe we can progress from the group stage."
