After the failure of 2011's Green Lantern, hope for the possible franchise has seemed bleak. There has been talk of another movie, but most people just want a reboot. But I don't think its needed. Green Lantern had everything perfect, besides the director and script. So I think with those two things, a better villain, and better focus, a sequel could be fantastic.
1. Have J.J. Abrams Direct It
Having Martin Campbell direct the first one was a huge mistake. They need to bring in someone who can handle a space movie, and a large supporting cast. And who better than the creator of Star Trek and Lost? The man is fantastic, and could triumphantly bring this franchise out of the trash.
2. Have Geoff Johns And Bruce Timm Write The Script
Another problem with the first movie was the awful script. They'd be wise to bring in Geoff Johns. Considering he wrote for Green Lantern, he knows it backwards and forwards, and would be perfect to write the script. Bruce Timm on the other hand, didn't write for Green Lantern, but knows the DC universe backwards and forwards. He's vastly overlooked, and would be perfect to co-write the sequel.
3. Keep Sinestro As The Villain
Its inevitable that Sinestro will be the next villain. And thats a good thing. Mark Strong was amazing as Sinestro. Not only will Sinestro bring more interest to the movie, but his corps gives way to other characters like Saint Walker and the Blue Lantern Corps.
4. Bring In The Blue Lanterns
One of the most important things to do with Green Lantern movies, is expand the universe. And the perfect way to start is with the Blue Lantern Corps. The guardians of the universe weren't well depicted in the first movie, the seemed more like curmudgeonly midgets than deciders of the fate of the universe. They'd have to expand upon them more, if Ganthet and Sayd are to start their corps. And David Tennant would be an amazing Saint Walker.
5. Keep The Focus In Space
Another major mistake from the first movie, the movie needs to be kept in space, not Earth. Oa was amazing in the movie, but it's scenes were limited. Sinestro isn't an Earth villain, and Green Lantern isn't an Earth hero. Don't force them onto one planet. It could also give way to a small Lobo cameo.
6. Kyle Rayner Instead of John Stewart
I'm not fond of the idea of bring in another human lantern, but if they must, John Stewart would be a mistake. Kyle Rayner on the other hand, would probably be better received. Most people like Rayner, and he could easily be a fan favorite. Save John Stewart for the fourth movie, should the series be successful.
I think that all that, and some after credit cameos (preferably Atrocitus), could make this sequel work.