Starting a faction is pretty easy, unless it's Shadowbane, then Elph will tell you to go to hell.

You raise interest in the game, say "Hey, I want a closed faction here!" Then you'll be asked who would lead, and you can either nominate someone or propose that you'll lead it yourself. There's some decision making on the federal end, a High Chancellor is appointed, then he/she is responsible to appoint the rest of the officers according to the constitution. If officers are appointed in the appropriate amount of time, your faction is formed!

[Linked Image from zandadev.com]