Jay Barnson has penned a development blog on the story of the three parts of Frayed Knights, noting the second - while still goofy - will have a darker tone.
A critical goal for the second games' story is it must be a stand-alone tale: A player must be able to play this game (cold) without even realizing it had a predecessor, and not feel like they missed anything. At the same time, there should be some rewards for the Frayed Knights veterans where they get some payoffs for some background elements set up in The Skull of S'makh-Daon. It has to reach a satisfying conclusion at the end of the game, wrapping up the primary storyline and only leaving a few threads hanging for the final title to tie up.
As you know if you've played through the original game, I like a bit of seriousness in my comedy. Personally, I cannot enjoy a story where I don't care about the characters, or where the stakes never seem to get very high. The Skull of S'makh-Daon struck some sober tones in the middle-to-end game, with a murder mystery the unveils something of a conspiracy. Frayed Knights 2: The _________ of ________* focuses much more on character development and delves a little bit more into some of their pasts.