diff --git a/salt/fleet/event_gen-packages.sls b/salt/fleet/event_gen-packages.sls
index 6d1e2264a..1bdccea48 100644
--- a/salt/fleet/event_gen-packages.sls
+++ b/salt/fleet/event_gen-packages.sls
@@ -4,7 +4,7 @@
 {% set VERSION = salt['pillar.get']('static:soversion') %}
 {% set CUSTOM_FLEET_HOSTNAME = salt['pillar.get']('static:fleet_custom_hostname', None) %}
 
-{% if CUSTOM_FLEET_HOSTNAME != None %}
+{% if CUSTOM_FLEET_HOSTNAME != None && CUSTOM_FLEET_HOSTNAME != '' %}
    {% set HOSTNAME =  CUSTOM_FLEET_HOSTNAME  %}
 {% else %}
    {% set HOSTNAME = grains.host  %}
diff --git a/setup/so-setup b/setup/so-setup
index 8e72a1b42..05aa0de27 100755
--- a/setup/so-setup
+++ b/setup/so-setup
@@ -526,8 +526,8 @@ fi
 
 		if [[ $is_fleet_standalone && $FLEETCUSTOMHOSTNAME != '' ]]; then
 			set_progress_str 73 "$(print_salt_state_apply 'fleet.event_update-custom-hostname')"
-			pillar_override=$'\'{"static":{"fleet_custom_hostname":"'$FLEETCUSTOMHOSTNAME$'"}}\''
-			salt-call state.apply -l info fleet.event_update-custom-hostname pillar=$pillar_override >> $setup_log 2>&1
+			pillar_override="{\"static\":{\"fleet_custom_hostname\": \"$FLEETCUSTOMHOSTNAME\"}}"
+			salt-call state.apply -l info fleet.event_update-custom-hostname pillar="$pillar_override" >> $setup_log 2>&1
 		fi
 	
 		set_progress_str 74 "$(print_salt_state_apply 'so-fleet-setup')"