Franjic underwent scans on his right hamstring on Saturday and they confirmed he has torn the muscle, which will rule the right-back out of the rest of the tournament.
Australia coach Ange Postecoglou labelled the injury a 'massive disappointment' - both for Franjic but also for the team after the right-back's strong first half in Cuiaba.
"Ivan's no good, he had a scan today and has a fairly significant hamstring tear. That rules him out for the tournament, and that's a real disappointment," Postecoglou said on Saturday.
"He was growing into the tournament and into the game; the first 15 minutes everything was a bit quick for him but after that he settled into the task and set up the goal really well.
"He was getting to grips with it so it's a massive disappointment. I'll talk to him later but there's not a lot you can say. But what's tasted should be motivation to come back for more."
Franjic injured his hamstring in the opening minutes of the second half versus Chile on Friday when he leapt for a high ball.
The Brisbane Roar defender had created Australia's goal in the 3-1 loss to Chile, crossing for Tim Cahill to score.
Franjic was ably replaced by Ryan McGowan in the second half, who claimed he would be ready to step in against the Netherlands if selected.
McGowan is better known as a central defender and was ripped apart at right-back in Australia's 6-0 loss to Brazil in September but insisted he will be comfortable as a full-back.
"I played a lot of right-back when I was at Hearts, I don't feel out of place there at all," McGowan said.
While Postecoglou agreed McGowan may start in Australia's next match against the Netherlands, the 48-year-old coach also hinted he may try something different.
"Ryan is a solution, there could be a couple of different things in the way we approach things," Postecoglou said.
"Holland represents a different problem to Chile, so we'll have a look in the next couple of days."
