Just as Battle Heroica is an alternative rule set with one player controlling the enemies, Faction Heroica is where players pick a specific region in the “World on Fire” game, which can include one player controlling the Heroes as their Faction, and plays against other players controlling other factions.
For instance, one player may want to be the enemies of the Dunes of Daseem, while another player may wish to be the enemies from the Sea board or the Isorea map. While the numbers are not always even, this hardly matters, as in both Battle and Epic Heoica, the numbers are never even.
In any case, the rules of this game are similar to Battle Heroica, in that a player may only move one character at a time, but the game uses modified combat rules for all characters except the “bosses” of each faction. The combat rules are follows: When engaged in combat, there are no health points for characters except the bosses, which uses the 16 health rules from Heroica: World On Fire rules for heroes. All other characters use the following rolls for combat. 1 (Sword and Skull) and 2 (skull) the player loses, and for rolls of 3 (Sword) and 4 (Shield) the player wins the combat. These combat rules apply to non-player factions as well. When battling bosses, the Strength numbers are the same for the characters as in the Heroica: World On Fire descriptions, except that if a player wishes to use the heroes as their faction, they may chose only one hero to be the “boss” character, so only one hero will have the 16 health rule.
The object of the game is to take over the entire Northeastern Territories.
Whenever all the characters and the boss character of a faction are eliminated, the player controlling that faction is out of the game.
This game format could be adapted to the official sets, but with Draida and Fortaan having the same sort of enemies, a good suggestion would be to not use the Draida enemies at all, but rather have that be reserved for any player that wishes to be the heroes, or if not, just have an up to three player game where the goal of each faction is to conquer the other regions and get to the ship.
These rules may be subject to change…stay tuned.
Homebrew Heroica: A LEGO® Heroica Fan Blog 
So are there no heroes at all? But more a case of Golems vs Werewolves? From my understanding of your rules it’s a one hit and out for each monster?
Well, one can play all the Heroes as their faction, or any of the other factions I came up with in the game.
Correct, as of right now, my game is the “one hit and out” rule, for this and all other “modes” of alternative play.
The reason for this is three fold. First, I have not found a satisfactory way to track “hit points” for baddies across multiple players, without using paper (paper seems to go against the spirit of Heroica in my opinion), and also coming up with “Strength” levels for the Heroes individually, and devising Strength + X levels for different weapons. Second, it could make my game too complicated for my two youngest kids, when the game is now fairly complex as it is. Finally, it would make what has become an exceedingly long game that takes many hours (days) to finish even longer. We are a family of five, and it takes us about three hours to play the four official games on their own, for instance…so you could imagine all these MOCs being brought into the mix)) Which is all fine, except for the kiddos, who as much as they love Heroica, get ready to do something different after a while and can’t maintain interest over long campaign sessions.