When Rudy goes on a bike trip with Bobby and Phil, the gang throw a party at the dojo. All is well until they notice Rudy's prized katana sword is missing. Jack, Kim and Milton try to find a new one, while Jerry and Eddie clean up.
Jack is invited to the junior martial arts championships in China, but while there runs into his enemy. Jerry, Milton and Eddie go on an adventure to find out the ending of a fortune.
Jack declines Kim's invite to a dance, so she takes a new boy at school, who turns out to be a black dragon. Milton and Jerry discover they have hot dates. Rudy and Eddie make cars for a scout competition.
Rudy flips a pro wrestler and goes viral, which makes Jack think it's acceptable to fight people at school, which lands him in detention. Milton worries when he thinks his girlfriend wants to kiss him.
Bobby unveils a new robot sensei, which greatly improves the gang's performances. Rudy is fired, but when the robot starts pushing them too hard, they try to get Rudy back. Milton and Eddie create their own robot.
Milton and Jerry both run for class president at school. Milton becomes school president and transforms into Abraham Lincoln. Meanwhile, Rudy hires Kim as his assistant director for the community theater's production of "Romeo and Juliet."
Carson, an old friend of the gang and Rudy's former star student, returns to Seaford. His own martial arts moves prompt Rudy to replace Jack with Carson in the upcoming tournament, annoying Jack.
Rudy makes the hardest decision of his life, when his Uncle Blake offers him a high profile job so Bobby Wasabi sells the dojo to Ty and the Black Dragons. After Ty downgrades the Wasabi Warriors, they quit and go their separate ways.
