In my experience, it does not matter much if you take a flop game to make a sequel of or one of your acclaimed games. The sequel can be a success or a flop, no matter the previous game.
However, what I noticed is that if you make a sequel to a previously successful game, you generate more hype, which can affect final sale figures. So a bad sequel to a previously successful game can potentially generate more money than a mediocre sequel to a previously bad title. If your sequel goes viral, there is no real difference anymore.
Be careful not to develop sequels too fast. One time I was making a sequel once the previous game was out and after making a new engine.
Critics told me that it is just a blatant money grab and gave me 3-5's despite having cutting edge technology in the engine.
To make a final list:
- Develop sequels not too fast after the first game was released
- Making a sequel to a previously good game generates more hype
- A sequel to a bad game can still be successful.