Due to slow business at the hardware store, Howard Cunningham decides to rent out the adjoining upstairs attic/apartment as a way to make more money. Fonzie brings his grandmother over to rent it, but she hates it. While his dad helps her down the outside steps, Richie talks Fonzie into moving in instead, much to the horror of Howard who still considers Fonzie a "hood" and nothing but trouble. (He nearly chokes Richie!) Will these two very different backgrounds be able to co-exist?

Trying to revive his slumping "cool", Fonzie plans a televised motorcycle jump over a record fourteen garbage cans in the parking lot of Arnold's Drive-In.