 After Daniel and Miyagi defeats the Cobra Kais, and after Miyagi humiliates their master, Kreese. All of his students desert him and he hasn t had any new ones. Kreese decides to close the dojo, he then goes to to his friend, Terry, who is also the dojo s owner, to turn the keys, and announces that he is leaving town. Terry decides to send him on a vacation and before he leaves, he tells Kreese that he is going to get Daniel and Miyagi. Part of his plan is to recruit a deadly karate fighter, Mike Barnes to fight Daniel in the tournament, he then pretends to be a friend of Kreese, who wants to "apologize" for Kreese disgraceful behavior. When Daniel s invited to participate in the Karate tournament that he won last year, Miyagi believes that it s not a priority. So Terry offers to train Daniel but in reality, he is putting Daniel through a gruelling training regimen as part of his plan. And Daniel s constantly being hounded by Barnes. Eventually all of the training that Terry puts Daniel through and Barnes  hounding, causes a rift between Daniel and Miyagi.