The mercenary is a great tool for players just starting out. It allows the player to snowball his army by earning gold from quests to buy more Mercenaries for the next quest and so on. This experience is doted with the occasionally return to your settlement and development of means for your future endeavors. This system serves as a great hook for the beginner by providing him; very little downtime, knowledge of the game mechanics, and learning the folklore of the world.
However as we approach mid-game the acquisition of necessary gold for these Mercenaries becomes effortless. As a result all sense of accomplishment is robed from the player who built up his/her settlement to produce this military force. Continuing in a loss of interest for the game. The proposed question being. "How do we limit the mercenary whilst maintaining the hook at the opening?"
The biggest factor on the battlefield, for PvE and PvP, is the level of experience a unit has gained. If the level of experience a mercenary unit could gain was restricted to level 4. Then the opening game would not be affected. But players would still realize the need for military production from their own settlements and plan accordingly.
edit: mercenaries that are bought with influence through the market system do not have the above restriction applied.