If the sales are not strong, you make no or very little money. A small company may not produce enough royalty income to cover your legal expenses. A typical royalty lasts for 3 years 9. Companies always want worldwide distribution, but may not have any ability to sell product in these territories. You could get locked into a deal that may not allow you to sell product in some territories.
Most companies require the inventor to participate in markdowns, returns, damaged goods and more.
You have control over all aspect of the product from the look to the quality to the way in which the product is marketed. You can make a lot more money. You can build a brand and brand identity. You can build a company and value to that company. The toy industry is a very exciting one.