Hi @champ22,
Your proxy factory itself does not need to extend ERC1967Proxy since it is not a proxy.
_data is an encoded function call to your implementation contract's initializer, and this encoded function call should include the initializer function name and its arguments. This allows the proxy to be initialized at the same time as it is deployed.
See Deploying Upgradeable Proxies and Proxy Admin from Factory contract for some examples of proxy factories.