Hi,

Factory reset is a mechanism that is target to do a restore of rootfs 
image, the target is to provide
reference software that helps embedded system vendors to do it easily 
and to be file system independent.

Here is a design proposal to implement Factory reset, next describe the 
components,

Partitioning: Need to create partition layout with an area for rootfs 
read-only and another with
rootfs rw (day to day OS) also it need another area for Linux Recovery 
OS (minimal).
Bootloader: Need to detect when a factory reset is needed and boots the 
Linux Recovery OS.
Linux Recovery OS: A minimal Linux OS to perform restore fron rootfs ro 
area to rootfs rw area.
Linux OS: A Linux OS that need to have an application to set the factory 
reset mode and
next reboots, the application will be simple and should have a plugin 
system for add support of who generate
the event IP, Serial, HW button, etc.

All of the settings should be specified at level of user configuration.

I attached a simple flow of how it works, any feedback will be appreciated?

Cheers,
     alimon

[1] https://bugzilla.yoctoproject.org/show_bug.cgi?id=1593