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[–] HACKhalo2 0 points 1 point (+1|-0) ago 

A factory reset basically dumps the /data partition and rebuilds it from the /system partition. If a bad app were to put itself in the /system partition, then a factory reset wouldn't get rid of it, only a complete ROM reinstall would, since that overwrites every partition the phone uses.

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[–] collegetoker ago 

I think what you are describing is a system restore, which is categorically different.