The gang meets in the main square, waiting for Mr. Ernst to convene a meeting he's called. Buddy trips and thinks he is turning into copy of his dad because he is clusmy like him. He even has stupid ideas like selling jars of "Arizona Air". The others convince him it is all in his head. Just then Mr. Ernst comes out of the lodge and trips in the exact same spot as buddy.
It turns out that he's going into Reddington to buy some horses for the ranch, using his computerized printouts. Since he's meeting Lucy there, and will be gone for the day, someone needs to be left in charge of the ranch. Brad, as riding instructor, feels it should be her. Ted, as senior staff, feels he should be in charge. Mr. E is about to leave it for them to decide, until Danny and Mel interject. They tell Mr. E that he has to make a decision or else nothing will get decided. So Mr. E flips a coin, and Ted wins. Mr. E hands him the keys to the ranch, reminding him to fix the corral gate.
Immediately, Ted sets sail on his power trip by scheduling a meeting later in "his" office. Brad, Danny, and Mel realize that a monster has been created. But Danny finds the bright side and tells his friends that Ted is nothing more than a substitute teacher. "This isn't a nightmare. It's an opportunity!"
In Ted's office, Buddy is looking in a mirror looking for a receding hair line like his fathers. Brad, Melody, and Danny enter Ted's office and take their seats for the meeting. Buddy has been deputized and dutifully serves as Ted's assistant. Ted, after determining that discipline has been unacceptably lax under the previous administration, lays down new rules, with the help of big flip charts. Gold stars are awarded for good behavior, and demerits are issued for violations. Meanwhile, Brad, Danny, and Mel disrupt Ted's edicts with humming and a couple shots from a squirt gun. But Ted is wise to their shenanigans. After all, substitute teachers speak Ted's name in fear! So he issues demerits to the troublemakers. Danny's load quickly adds up to a citation, which is worth one hour of free labor. He leaves them with that and tells the staff to shape up. Brad snatches Danny's citation and tears it up in disgust. Ted returns and gives Danny another citation to replace the ripped one and another for failure to stop Brad. Melody gets one for failing to stop Brad as well and Brad gets one for ripping up Danny's.
Later, at the stables, Brad finds Danny, who waves a sheaf of citations at her. Brad has one of her own for "failing to monitor her bunkmate's toothpaste dispersal." They find Buddy giving himself an eye test worried about his vision.
Meanwhile, Ted and Mel are at the lake. Ted is issuing her citations as fast as she can rip them up. Danny and Brad come across the scene, whereupon Ted demands that they jump into the lake to test Mel's lifesaving skills. Well, Brad threatens to throw Ted in. Melody intervenes, telling them to just wait until the end of the day, Mr. E will be back soon. But Buddy shows up with some news: His father's jeep is out of gas and he won't be back until tomorrow. Ted pulls an I told you so, and the seething kids back him off the plank, right into the lake.
Back at the lodge, the kids are busy maintaining the operation. A soaked Ted suddenly shows up, screaming that they're all traitors, and that they're all fired! Ted is clearly losing it. There are guests in the lodge, and Brad frantically tries to calm Ted down, telling the guests that Ted forgot to take his medication. The kids try to placate Ted by agreeing to talk to him in the office, but when they get there, they lock Ted in.
Ted is really losing it now, ranting and raving. While Danny goes outside to nail the windows shut, Brad and Melody start to argue about who's in charge now. Then Ted finds the circuit breaker box. It so happens that the switchbox to the entire ranch is in Mr. Ernst's office. Ted kills the power to the bunkhouses as punishment. The kids try to get back into the office, but Ted has regained control of the keys, thanks to his deputy, Buddy.
Ted and Buddy know they have the upper hand for now, but the key to maintaining power is good intelligence. So the two sneak off to spy on the others. They find the three in the Girls bunkhouse, and they peek through the window to get wind of their scheme. Brad has drawn a map of the office and is explaining by lantern-light the plan to regain control of the ranch. Melody and Danny are reluctant participants, especially knowing that the boss is returning tomorrow anyway. But Brad will have none of it.
The plan calls for Danny and Mel to execute a diversionary squirt gun attack through one window, while Brad enters and liberates the keys. The attack commences at dawn. Of course, Ted and Buddy have heard the whole plan.
The next morning, the kids sneak up to the office window. They see a sleeping form on the couch, and have noticed that the nails have been removed from the window. This looks easier than they thought! But just as they are about to attack, Ted and Buddy ambush them with a garden hose.
But then they realize that the horses have escaped from the corral. During all their bickering, they forgot to fix the gate! Melody takes charge, telling Ted and Brad to round up the horses while she and Danny fix the gate.
The horses are finally rounded up, and Ted and Brad have realized how foolishly they behaved. They apologize to Mel and Danny. They wonder who's been running the ranch. They rush to the main lodge to find Buddy answering phones and checking guests out. Buddy realizes that becoming like his dad isn't all bad. By the time Mr. Ernst arrives back, everything appears normal and calm, except for the guests that appear concerned that Ted is not under restraint and medication.