Yeah, it's a sinking ship like all communities, diseased and corrupted, death it's only release. But I'll tell you about how I make a faction.
This is how I make a kingdom and take the map.
1 You must be able to defeat other armies with minimal losses. I'm not getting into how to do that, but if you can't do this, just stay a vassal and play more. You will not be able to get other clans fast enough to help you, so you must be able to defend yourself, yourself.
2 When you are rank 4 pick a side of the map to make your faction, I like Odohk on the Khuzait side or Ostican in Vlandia. Just pick this mentally, regardless of what fief you own.
3 Assuming you are a vassal with an army, use your clan mate army to pick up any useful troops you may have in a garrison, release your armies (not disbanding the parties!), leave kingdom and talk to your governor in a fief you own to make a faction immediately, then re-summon your parties to an army with you. Now beat up your old faction to gain influence in you own name and pass policies to raise loyalty and security, you will need these, do it ASAP. Other policies that buff your party size too. Keep this up until you old faction want to make peace for a good deal, paying or receiving low payment will last longer then a large payment.
4 Go to the area/faction you actually want to start your faction and attack them (this may be the same as you broke away from), pass the policies if you didn't already. Beat their armies, take a fief, do it again to the nearest fief, you should be able to protect several fiefs near each other. If you weren't a vassal now is also when you would make a faction with your governor and also you need to make some clan parties and fill them. Just keep racking up influence then when you have 500, you can turn a wanderer into a new vassal! You want to do this every 500 influence for the rest of the game! You can also recruit normal clans if it's convenient but I have completed the game several times with only wanderer-vassal clans. I'm goin to post a separate pasta of mine regarding recruiting clans and making them from vassals.
Recruiting/making clans. They (Clans)consider several things in order of importance:
1: Their own fiefs and finances, no fief = easy to get, less money they have, the easier too. Clans with a fief are very expensive (like 1m-2m) sometimes and only bring thier fief if you're at war with thier faction
2: Power situation of thier faction versus yours. When their faction is ****'d and you're is okay, they are easier to get. The power is the field parties + garrisons (not militia), the more fiefs and clans (parties) your faction has the more attractive you are!
3: Thier relation to their ruler and thier relation to you. If they like their king they are hard (expensive) to get and more likely to flip flop back to that faction later, but if they don't like them but have a good relation to you, they are easier and will stay.
When a lord flat out refuses you it means the hypothetical amount of money they would want to turn is just too great compared to what you posses, the devs did this so you don't waste your time on the persuasion dialogue only to not be able to get them anyways.
SO go after those poor home less clans (make some too by taking thier fiefs!) , defeat them and release after battle for +relations, hire some merc clans and you'll be getting vassals in not time (maybe...)! The more you have the easier it is to get more because you power goes up! *Up to a point, at some point when you have 20+ clans it becomes harder or impossible to recruit more normal clans. You can however keep making clans from wanderers.*
Just to be clear, you cannot compensate for them having a fief or you faction being much weaker then theirs's just by having high relations. A lot of people assume so, but it isn't so. It will help for sure but they need to be poor, scared and preferably mad at king too!
You can just make clans out of wanderers now, costs 500 influence, 20k and 1 fief, you must be the ruler then talk to a wanderer in your clan (not family) and say "I want to reward you" If they're in default gear or you remove their gear they spawn in lords gear matching their culture. There's no reason to bother with normal clans now unless you just can, like you have tunz of money and good relations and run into a clan leader and they will join you.
I will use up all of my fief to make wanderers so that "the game" will put me on the ballot for more, so I can repeat this as the faction expands. If you retain to many you will not be on the ballot anymore. I get more then enough money from all the endless fighting, I don't need fief incomes.
A note on *Charm* skill: Charm and some of it's perks (Natural Leader) (Meaningful favors OR forgivable grievances ) can help you get through the dialogue game easier, however it does not effect the clan leader giving you the chance to persuade them or not. That is determined by the stuff I talked about in the first 3 parts.