Sql parent Child Query not working
Define the outer join as a separate, non-recursive, CTE:

WITH FactorColumns AS
(
  SELECT  a.FactorTitle,
          a.FactorCode,
          a.parentId,
          c.FactorColumnCode,
          c.FactorColumnTitle,
          c.FactorColumnValue,
          c.isFactorValue,
          c.FieldType
  FROM FactorSetup a
  LEFT JOIN FactorColumnSetup c ON a.FactorCode=c.FactorCode
),
...


Now just reference FactorColumns in EntityChildren – and syntactically your recursive CTE will have no outer join:

...
EntityChildren AS
(
  SELECT  f.FactorTitle,
          f.FactorCode,
          f.parentId,
          f.FactorColumnCode,
          f.FactorColumnTitle,
          f.FactorColumnValue,
          f.isFactorValue,
          f.FieldType
  FROM FactorColumns AS f

  UNION ALL 

  SELECT f.FactorTitle,
         f.FactorCode,
         f.parentId,
         f.FactorColumnCode,
         f.FactorColumnTitle,
         f.FactorColumnValue,
         f.isFactorValue,
         f.FieldType
  FROM FactorColumns AS f
  INNER JOIN EntityChildren AS e2 ON f.parentId = e2.FactorCode
)
...