Fonzie wants to win the ""Teacher of the Year"" award to spite a fellow teacher.

Chachi discovers a great basketball player who recently transferred to Jefferson High. However, he initially holds back when performing for Roger and, suddenly, changes his mind about being on the team when his father orders him home in the middle of a practice.

Fonzie substitutes for Roger in his hygiene class, and, as a prank, the students hide the lesson plan and tell Fonzie they're learning about sex. Roger is later informed that he will be fired as a teacher as a result of Fonzie's teachings.

Fonzie is rejected several times by a new teacher at Jefferson High. After he kisses her in a final attempt to win her over, she screams and runs out of the house. Roger talks to her and finds out that she is a nun.

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.

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

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.

Fonzie hires a convict, via a work-release program, to be a mechanic at his garage. After the convict, Jim, sees K. C. perform a song at Arnold's, she invites him to dinner. Howard stops K. C. from seeing Jim after Fonzie informs him and Marion of Jim's felonious past.

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 finds a note he wrote as a child containing a list of things to accomplish in the next twenty years. On the list is one goal he hasn't yet accomplished: climb Suicide Hill on a motorcycle. The problem is that he's already tried it and failed.

New events in Joanie's life cause Chachi to resent her for not having enough time for him. Each has their own solution: Joanie wants to break up, and Chachi wants to get married.

Fonzie meets a beautiful woman, Nancy Haley, at his garage while listening to the radio in a beat-up 1955 Chevy. He takes the woman home, but when he goes back to return her purse, an older woman tells him that the Haleys moved out ten years ago when their daughter was killed in an automobile accident.

Fonzie's adoption request is reconsidered after a stern talk by Howard to the adoptions administrator.

Meanwhile, Joanie and Chachi continue to prepare for their wedding.