Heres my thoughts on factions.
The path through each guild should end with a choice, allowing the player to either become guildmaster or simply continue to serve as the right hand of the guildmaster. Leadership is not for everyone.
It should also not be possible to join all guilds. It certainly shouldnt be possible to join both the fighters and the mages guild, since they could have conflicting goals. It could however be possible to be part of a secretive guild such as the thieves or assasin's guild aside from being part of a publicly known guild.
The secretive guilds could have their own sources of information however, and through that they could prevent the player from joining more than one secretive faction.
I personly find the guilds a bit sterile so far. I dont really think that a guild needs a story to tell. It should be more random. There could be more missions to take than what would be required to advance. That could keep it interesting to replay.
There could be a message board for example at the fighters guild where various contracts are displayed. After that you can talk to the local leader to take up the contract of your choice. At all times there could be contracts for various ranks displayed, and other members could be seen taking the contracts as well. The quests could be a bit more random. Here and there some quests could be tied into the story, but most of it during advancement could just be random.
Each guild could have their own way of advancement of course, the mages guild should be less active in its missions than the fighters guild. In fact, I would propose a very different system for the mages guild, with several branches.
For the mages guild you could first be an apprentice, but at some point you could choose between an academic path and the path of a combat mage. Through the academic part you would become a teacher and advisor. At first you could handle complaints from villagers about their crops being destroyed or such, and you could fix that. Later on you could teach new apprentices and give advice to lords and ladies on important matters that require magical skill. As a combat mage, you could follow the common path filled with battle. It should really require destruction magic however and occasionly other spells as well.
Unless they are putting in climbing and such they dont need to bother with a thieves guild if you ask me, it wouldnt be worth the effort. Climbing and such would also make the assasin's guild a lot more interesting.
Those could have contracts too however, at the thieves guild you could boast about the things you have stolen and how difficult it was. You could build a reputation by stealing the most impossible objects without being seen.