- Chozen and Daniel hatch a risky plot against Terry. In Mexico, Robby and Johnny look for Miguel, who discovers the truth about his dad.
- Chozen infiltrates Silver's dojo but inadvertently betrays himself, while Miguel learns more about Hector and his background. Johnny and Robby continue their search for Miguel, and get into a hot spot when they get too close to the former criminal.—Gislef
- In a flashback to Okinawa, 1972, a young Chozen trains with adult servicemen under his uncle, Sato. Sato finds out that Chozen has padded his sandbag to avoid the pain, and angerly warns Chozen that without honor, a man is nothing.
In the present, Terry has his new possible senseis instruct his students for the day. Chozen opts to train Tory. Meanwhile, Johnny and Robby are following Miguel's trail. Johnny is asking anyone and everyone about Hector, and Robby suggests that if Hector really is dangerous, they shouldn't use his name so lightly. Due to the language barrier, Johnny doesn't realize his car is in a no parking zone, and his van is towed away. That morning Miguel gets up, having stayed the night at Hector's beautiful house. Hector asks him how he moved to fast to save his son, and Miguel attributes it to his karate training. Hector seems to be a loving and caring family man, even though his "son" is actually his wife's from another marriage. He tells him he was married before too, but his wife left him before they had any kids. Miguel isn't able to bring himself to tell his father that he is is son just yet, but accepts his's invitation to go out for the day.
Chozen trains Tory, but he senses her conflict and calls out her less than perfect execution. He demands to know what she is fighting for, and in return she asks him why he became a sensei. He explains to her the absolute importance of honor, and tells her no one can take it from her but herself. Silver looks on as Tory's performance improves under Chozen's instruction. He approaches and asks Chozen about himself, and Chozen gives Silver a fake name and says he is from Kyoto, Japan. Terry is intrigued by the newcomer, and allows him to continue the training. Johnny and Robby are stranded, as the van has been impounded and the fine is too high for them to pay. They see a group of people betting on two men eating hot peppers, and decide to make the extra money by entering. Robby volunteers, and makes it through the entire first round. Fighting through the pain, Robby demands the hottest pepper available, which even his tough looking competition seems nervous about. Using Daniel's meditation technique, Robby downs the extremely spicy pepper without tapping out. His opponent is forced to do the same, but is unable withstand the heat. Robby and Johnny win more than enough money to pay for the van.
And the end of the day, Terry invites Chozen to his home for dinner and drinks so they can talk more, to which Chozen agrees. Once everyone else has left, Tory confronts Silver about rigging the tournament. He does not deny it, but says that it was only insurance to make certain Cobra Kai survived, and that Tory really did beat Sam. Tory is still unsure, so Silver offers her a choice. Leave Cobra Kai, or stay and lead the next generation.
While preparing to leave with his dad, Miguel finally calls his mom. He scolds her for never telling Hector about him, and is angry he missed out on a seemingly wonderful father. Carmen begs him to listen, and insists Hector is not what he seems, but Hector walks in and Miguel hangs up, not before Carmen overhears where they are going. Johnny and Robby retrieve the van and continue their search, and Robby reveals that he actually pocketed the last pepper, replacing it with a piece of candy to win the bet. Carmen calls and tells them where Miguel is headed. Hector takes Miguel to a classy MMA fighting ring, where once again it seems he has a great deal of influence. He tells Miguel he made a lot of money in his old line of work. The kind of work that attracts both friends and enemies.
Daniel prepares Chozen for his meeting with Silver, and reminds him to beware of Terry's tricks. Chozen vows to find Silver's weak spot, and goes to his house for dinner. Terry treats him to rare Japanese whiskey and fish, and they discuss Chozen's supposed background. Chozen says he is not sure he wants to work for Silver, so Terry decides to convince him. In Mexico, Johnny and Robby arrive at the fighting ring, both wearing joke FBI shirts Johnny got at a convenience store, and start asking for Hector. The fighters, who all work for Hector, call him and tell him two FBI agents are looking for him. Hector suddenly becomes paranoid, and demands to know who Miguel really is, though Miguel sticks to his story about being a backpacker. Hector searches him for a wire and checks his phone, but finds nothing suspicious, stopping just short of finding a picture of Miguel with his family. He calms down, but leaves the ring with Miguel in tow when he sees Johnny and Robby come into the arena. Johnny spots Miguel, but is unable to get his attention before he is confronted by one of the fighters. Johnny, using Robby's swapped hot pepper, eventually defeats the fighter, and demands to know where Hector went.
Terry shows Chozen his prized weapon collection, including an ancient Japanese sword. Chozen digs deeper, and asks Silver why Cobra Kai is so important to him. Silver explains that, as a man with no children, he plans to make Cobra Kai his true legacy. He has a plan to expand far further than the Valley, and offers Chozen a place as his right hand. Chozen agrees, giving a Okinawan toast to celebrate.
That night, Hector brings Miguel to a closed restaurant to hide out, saying he needs to lay low for a while. When Miguel brings up his wife and her son, he says they were only after his money anyway. He starts drinking, and tells Miguel that the everyone, such as women or the government, will always come after what is his. He casually pulls out a gun and sets it on the counter, and Miguel fights to stay calm as Hector half drunkenly tells him about his first wife, Carmen, and how she couldn't stand his work, and how he can never return to his home country Ecuador because they also tried to bring him down. He admits that despite that, he regrets nothing, and considers it the cost of success. Miguel, seeing his father's true colors for himself, decides to leave. Hector lets him go, and continues to be unaware of his son's existence. A heartbroken Miguel calls Carmen and tearfully apologizes for running away, just as Johnny and Robby arrive to bring him home.
The next day at Cobra Kai, Tory brings in her championship trophy to display at the dojo, having made her decision to stay. Silver acknowledges her, then sends her away since he has canceled class to take care of some business. As she leaves, Chozen enters to find Silver, who calls the six other applicants to box him in. Silver has discovered Chozen's true name, having realized the deception when Chozen, while posing as a Kyoto native, toasted a world famous Kyoto whiskey with an Okinawan phrase. Silver is furious, and offers a triple salary and job to the man that takes Chozen down. Despite their best efforts, Chozen defeats all of the other senseis, and gives Silver an ultimatum; keep expanding, keep hiring, or go near the LaRusso Family, and Chozen will take merciless revenge.
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