ARC is tricky to set up correctly as you have to do it right not only on the AVR but also your TV.
So if it was working before, you probably should try unplugging the unit, wait for 30 seconds or longer before plugging it in to try if it fixes the issue.
If unsuccessful, then yes you should try a factory reset. After that, be sure to go through the ARC set up procedure.
Factory reset procedure:
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