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is it only members of the same faction can be in the same guild?
the reason i ask is because if you are supposed to quest as guilds and do dungeons etc how does that work as i didn't think that different factions could group together
Factions doesn't affect guilds; you can be in whatever guild you want to be.
Just questing outside of dungeons/trials won't work with another faction.
And if you want to PVP in Cyrodiil with a guild be careful to choose the right one because you cannot change your fraction for PVP.