Roger's family sends his brother, Flip, to Milwaukee with the hope that Roger can straighten him out. Roger entrusts Flip to pick up Marion after he attends a Fats Domino concert, but he skips the concert to hang out with some hoodlums and leaves Marion to walk home in the cold.

It's love at first sight for Fonzie when he sees a woman in a store as they pass each other on the escalator. Potsie happens to know who she is (Ashley Pfister), and Fonzie vows to find her and make her his.

Joanie and Chachi come back to Milwaukee after spending the summer in Chicago. Joanie wants to move there to be with Chachi and to continue their music career. After telling Howard and Marion her plans, which include attending Northwestern University, Howard refuses to let her go.

Now that Joanie, Lori Beth, and Richie Jr. have left the Cunningham house, Marion looks to find ways to cope and occupy her time. Meanwhile, Fonzie isn't able to run Arnold's by himself in addition to his garage and teaching duties, so he looks to sell his half of Arnold's.

Fonzie receives a good citizenship award from the Milwaukee Chamber of Commerce, but the ceremony is interrupted by a disgruntled childhood classmate of the Fonz who's been waiting 17 years for his revenge. They agree to settle their differences, but Ashley asks Fonzie to promise not to fight.

Marion encourages K. C. to date, so she accepts an invitation to Arnold's Gala Costume Ball from Melvin Belvin.

Facing competition from a hardware store at a new mall, Howard says he'll have to close Cunningham Hardware.

Roger's old flame from his school days shows up, and Roger cannot resist her. Fonzie attempts to prevent her from breaking his heart again.

Roger tries to convince Flip to stop drinking and hanging out with guys that do. Flip doesn't take his advice, and he and his friends accidentally hit Heather with their car.

Meanwhile, Fonzie auditions barbers to replace his who recently died. Also, Jenny, K. C., Bobby, and Melvin are in charge of decorations for the Winter Carnival.

Fonzie and Roger miss their flight to Minneapolis for a teacher's convention, so they agree to go with Potsie's uncle, Omar, who has a small plane he uses for crop dusting and spreading ashes. Omar jumps out when there is trouble with the engine leaving Fonzie and Roger by themselves with no parachutes.

Fonzie babysits Heather when Ashley leaves for a tax seminar, but his attention is drawn away by a televised heavyweight title fight leaving Heather resentful toward him. Meanwhile, Joanie and Chachi return to Milwaukee after Joanie says she's sick.

After deciding to quit the band, Joanie moves back in with Howard and Marion to enroll in a teaching program at the University of Wisconsin. Chachi tries to convince her to stay with him in Chicago after he isn't willing to go with her back to Milwaukee.

Jenny dumps a nice guy to be with a former Olympic swimmer, but K. C. learns that the swimmer doesn't feel the same way about Jenny as she feels about him. Meanwhile, Fonzie wants to have a swimming pool put in the Cunninghams' backyard.