When I first saw Gremlins 2, I found it extremely disappointing. I had been hoping for another semi-serious dark comedy with some horror like the first one, but instead we got a slapstick satire lacking any of the thrill (and coherence) of the original. While I appreciate it more today, I still feel its 67% average score (rotten tomatoes) is well deserved. It could have been so much better, and effectively killed the franchise (until now).
This isn't really true, warner brothers themselves killed the franchise.
It was already planned to release in the cinema but at the last minute they decided to move the date forward and put it out the same day as dick tracy which was suicide, it tanked at the cinema because everyone went to see dick tracy instead despite it being utter trash(thanks madonna).
Gremlins 2 ended up doing amazing on V.H.S but it was already too late.
The general response at the time was actually positive but the decision to change the release date and put it up against dick tracy single handedly killed the franchise.
Yes, it's not as good as the first film but the franchise would have easily carried on if it wasn't for warner brothers changing the films release to coincide with dick tracy.
Everyone involved in the film blamed them for it, but the studio executives at the time were too stubborn to admit their own mistakes and instead said the poor cinema takings were due to the film being bad, this in turn ruined the relationship between everyone meaning a third film was highly unlikely.