Bulldog asks Roz to produce his show; Frasier scornfully dismisses the offer as yet another attempt to get Roz into bed. Feeling unappreciated, Roz angrily quits and works for Bulldog. Bulldog's ratings soar while Frasier's plummet, but he refuses to swallow his pride, certain that it's only a matter of time before Bulldog makes his move.
Sam Malone visits Frasier in Seattle; it turns out he needs advice on whether to go through with his wedding. Complications arise when Frasier realizes that he had an affair with Sam's fiancée, Sheila.
Frasier casually wanders into Daphne's bedroom, making her furious with him. He apologizes, but inadvertently does it again, this time catching her naked in the shower. Meanwhile, Niles desperately tries to soften Maris after he foolishly believes her declaration that she wants no birthday party or presents.
Frasier and Niles put themselves forward as candidates for two vacant memberships in Seattle's exclusive Empire Club; upon learning that there is only one vacancy, they try to sabotage each other at the opening cocktail party.
Martin prepares for his annual ice-fishing trip, but when Duke cancels, Niles volunteers to go along, wanting a chance to bond with his father. Frasier does so too, ruminating that his father has never in his life said "I love you" to him.
One of Frasier's callers, a German woman named Gretchen, suspects that her husband is having an affair with his client. Frasier suspects that the woman is Maris. When Niles finds out, he challenges the (very large) man to a duel.
Bebe, Frasier's agent, convinces him to sham sick during his contract negotiations. After she issues an ultimatum to the station manager, the two spend a tense night at his apartment, and sleep together. The next morning, he tries to let her down gently, but then hears that she is threatening to jump from the station window.
Visiting a venerable old Seattle restaurant before its final closing, Frasier and Niles decide to buy the place. Disasters ensue on their opening night, including a mass walk-out by the staff, the fire sprinklers going off, and a car crashing through the wall.
Frasier comes home in the mood to celebrate Martin's birthday, only to find he and Daphne arguing over doing his exercises for the umpteenth time, and Niles furious at him for "stealing" one of his patients. When a blackout traps the family and Roz in the apartment, Frasier gamely tries to carry on the party atmosphere.
The boys discover a box full of song lyrics that Martin wrote for Frank Sinatra; with their help, he sets one to music and sends it off. Frasier tries to compose a sincere eulogy for a despised late aunt, while Niles tries to find the perfect place to scatter her ashes.
While moving Martin's chair in preparation for hosting his wine club meeting, a tiny scratch on the floor sets off an avalanche of repair work in his apartment, sending Frasier into panic. Niles is furious and heartsick when instant chemistry arises between Daphne and his building contractor, Joe.
Kate cancels the annual raise for the station staff; with Roz's encouragement, Frasier organizes the on-air talent to strike, and is elected to negotiate with Kate. Their negotiation turns into a vicious argument, which turns into a passionate affair.