If you start up core-image-sato then power it down again you can see that the formfactor script (/etc/formfactor/config) tried to call fbset but failed with "command not found". fbset is available so presumably this is because PATH is not set appropriately at the time the script is run; perhaps we need to specify the full path (/usr/sbin/fbset)?
Fixed in master: http://git.yoctoproject.org/cgit.cgi/poky/commit/?id=3f6ed2c850cac41f40aa3f3fe8ae7832668c1e45