This story starts off with the Baudelaires hiding in the back of Count Olaf’s trunk after the fire of the Hostile Hospital. The so-called theater troupe (which are Count Olaf’s assistants) talk about Madame Lulu (which is the lady who told Count Olaf about where the Baudelaires are hiding each time) and arrive at the Caligari Carnival and the children escape the trunk thanks to Violet’s lockpicking and use the disguises from the car. Violet and Klaus disguise as a two-headed person and Sunny wraps a beard around herself. They call themselves Beverly and Elliot and Chabo the Wolf Baby.Violet and Klaus are forced to eat an ear of corn to get in the House of Freaks and Sunny has to growl and show off her sharp teeth.
Madame Lulu takes them to the caravan with the other freaks. Hugo is a hunchback, Colette is a contortionist, and Kevin is ambidextrous/ two-handed. Sunny/Chabo realizes that she has a new cooking skill and used it by putting cinnamon in the hot chocolate Hugo made. The next morning, Olaf asks Madame Lulu if one of the Baudelaire parents still alive and Madame Lulu responds with that one is still alive in the Mortmain Mountains. As a gift, Olaf makes a lion pit with real lions to draw a large audience. The orphans go to Lulu’s tent after to search for clues. They find out that Madame Lulu is part of VFD and she breaks down.
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She reveals that she really is Olivia Caliban. The Baudelaires reveal their identity as well. They promise to go to the Mortmain Mountains to find the missing parent.
That night Esmé visits the freaks with an outfit that says “I Love Freaks.” She has a sack on her back to imitate Hugo’s hunchback and a hat that represents Beverly and Elliot’s two heads. She convinces the freaks that whoever gets picked to go into the lion pit to pull Lulu with them. She bribes the freaks with gifts. A large coat for Hugo, A coat that lets Colette contort, a razor for Chabo, A sack to hide one of the two heads for Beverly and Elliot, and a rope to tie one of Kevin’s hands so he has one dominant hand. Everyone is fooled except for the Baudelaires.
They refuse. A large crowd shows up for the lions to devour someone. Olaf dramatically opens the paper from the hat and it shows that Beverly and Elliot get picked. They stall and escape.
A scene is created and Madame Lulu dies. The carnival ends up being burned to the ground along with the lions. The lions sadly die and their bodies are found by Lemony Snicket. Violet and Klaus end up traveling in the caravan behind the truck with Sunny in the front. Kevin cuts off the caravan and they slide down a mountain. That is where the story ends and the next book, “The Slippery Slope” starts.