Austin is still not allowed to make any music under his contract with Starr Records since he outed his relationship with Ally. Austin soon decides to enroll in military school since his friends are going to be away, Ally on her European tour, Trish managing Boynado, and Dez at film school. Unbeknownst to Austin however, Ally, Trish, and Dez have all decided to stay in Miami so they quickly have to go stop him from completely enrolling.
Still not being able to perform, Austin is forced by his parents to join the family business and work at Moon's Mattress Kingdom. However, Austin doesn't want to work at the mattress store so, with the help of getting fired expert Trish, he tries to get fired from the store. At the end of the episode, after Ally approaches Austin, Dez, and Trish with the idea of opening a music school and they all excitedly agree to the idea, Austin tells his parents he doesn't want to work at the store. His parents tell him they just want him to be happy and are okay with his decision.
It's the grand opening of the music store and Team Austin & Ally is very excited. But, when Austin and Ally are told by a reporter that the idea of the music school just looks like two pop stars trying to make some extra bucks, the two are pressured into claiming that they can make a child into a musician in just a week. Now, Austin, Ally, Trish, and Dez must work together to teach four kids an instrument by the end of the week. Austin in particular takes an interest in a skater girl named Dylan who wants to learn the guitar but is scared of what her friends will think of her.
Senior year had just started for Austin, Ally, Trish, and Dez and they are all very eager to have a fantastic senior year together. However, Austin soon learns from his Spanish teacher from his junior year that since he never passed her class, he is still considered a junior. Still being considered a junior, Austin would not be able to attend any senior events including senior prom, senior picture day, etc. Now, Austin must study hard to ace the Spanish test that will allow him to pass the class so he can become a senior. Trish hires a mariachi singer to follow him around and sing everything he says to help him learn Spanish words. Austin is almost completely ready for the test by the day of but then he accidentally over sleeps and misses it. Instead, Austin sings a Spanish song he wrote to his teacher to show her he knows Spanish. Señora Gomez loves it and passes Austin for the class.
A new student named Shelby Hayden comes to the music factory for violin lessons but she is not good at it at all. Austin and Ally decide to make a bet on if Ally can teach Shelby how to play the violin by Friends and Family Night. If Austin wins, Ally will make Austin a five foot wide pancake and if Ally wins, Austin will give Ally a designer sterling silver necklace. Ally ends up losing the bet, as the two learn that Shelby's real talent is dancing, not playing the violin. However, Austin still gives Ally the necklace because he believes in her.
Trish brings a musical duo to the music factory named Billie and Bobbie from "The Billie and Bobbie Show" to perform for the students and talk to them. But as the two spend time at the factory, Austin, Ally, Trish, and Dez realize that the two are trying to sabotage the music factory into closure so they can make their own music school and steal all of Austin and Ally's students. Once the four realize this, they devise and carry out a plan to get Billie and Bobbie to turn against each other thus breaking them up and ending their plan. They stop the duo and in the end they get an apology from them.