Colonies.

[The Edified Gamer]

How do I make colonies? I am aware its a merchant action but what do I need to do to get the option?

[Iskar]

An admiralty (second tier of the harbour building chain) is what you need although chances are pretty low without the top tier of that chain (trade port) and without any upgrades. Best to get 2-3 coastal or island provinces with 5+ coastal settlements and set them up with trade ports and governors to reap the full benefits.

[ShadowFox]

Like iskar said you gotta build the admiralty, also if possible try to have as high a navigation skill as possible to increase success and you will need lots of excess trade power to cover it. But they do give a TON of gold :D (Your merchant will have a chance to die while maintaining colony but it seems to be pretty low, I had one merchant with 4 colonies and he held them for about 3 kings before he died from natives)

[Iskar]

... and even if their expedition "fails", i.e. does not set up a colony, they usually bring back 3 - 4 times the investment of ~6000 gold.

Edit: The Age of Exploration achievement also helps alot.

[The Edified Gamer]

Thank you both. That has been really helpful

[Chompers]

To add a bit of clarity, once the admiralty is built and you have a merchant in court at *some point* they will randomly get the quest to get an expedition as it seems to get entered into the quest rotation along with profitable deal and all that jazz. It doesn't happen super often because they can be very lucrative, and even if you succeed the chance of generating a semi-permanent colony is low. In my experience it takes a bunch of tries to get one so I just do every expedition I get that has a high success chance.

Also be aware your merchants can get killed by natives so every colony you attempt to nab increases this chance as far as I can tell.

[Iskar]

Indeed, I send them anyways, whenever it comes up because the chance of death-by-angry-natives is rather low and even the profit in case of not finding a colony makes up for any investment including opportunity cost.