Im not 100% sure about this, but I believe in order to be king/ruler of a faction you have to conquer a castle or town.
"If you are currently in a faction," after you take a castle it gives you an option to take it as your own or give it to someone else, you need to take it for yourself. And if you get a message back saying that the king decided to give it to someone else, you then have to options, "accept his decision and get a small reward" or "renounce your allegiance and take the castle for yourself" The 2nd option is the one that you want to take to be a king.
If you have anymore questions, or this was unclear just let me know. And I am not Completely sure of this but I believe thats how its done.