                    FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

BP WEST COAST PRODUCTS LLC, a            
Delaware limited liability
company,
                 Plaintiff-Appellee,
                                                 No. 05-15076
                v.
RAYMOND D. MAY; SHARANJEET K.                    D.C. No.
                                              CV-02-00529-LRH
GHUMMAN,
            Defendants-Appellants,               OPINION
               and
NANDI, INC.; WEST JET, INC.,
                        Defendants.
                                         
        Appeal from the United States District Court
            for the District of Nevada (Reno)
         Larry R. Hicks, District Judge, Presiding

                  Argued and Submitted
           December 8, 2005—Pasadena, California

                       Filed May 1, 2006

      Before: Harry Pregerson, Robert E. Cowen,* and
             Sidney R. Thomas, Circuit Judges.

                    Opinion by Judge Cowen




   *The Honorable Robert E. Cowen, Senior United States Circuit Judge
for the Third Circuit, sitting by designation.

                               4953
4956          BP WEST COAST PRODUCTS v. MAY


                         COUNSEL

Gennady L. Lebedev, Esq., Los Angeles, California, for the
appellants.

Jeffrey M. Hamerling, Esq., San Francisco, California, for the
appellee.


                         OPINION

COWEN, Circuit Judge:

   Raymond May and Sharanjeet Ghumman appeal the order
of the district court granting summary judgment in favor of
BP West Coast Products LLC (“BPWCP”). The district court
concluded that BPWCP did not violate the Petroleum Market-
ing Practices Act (“PMPA”) when it sold its interests in the
gas facilities operated by May and Ghumman and non-
renewed its franchise relationships with May and Ghumman.
The principal issue on this appeal is whether BPWCP acted
in good faith and in the normal course of business when it
determined to sell the facilities in compliance with the PMPA.
                BP WEST COAST PRODUCTS v. MAY                 4957
We have jurisdiction pursuant to 28 U.S.C. § 1291 and will
affirm.

                                I.

   BPWCP owns the real property and improvements of sev-
eral ARCO-branded gasoline facilities in the western United
States. BPWCP leased some of the facilities to franchisees as
lessee dealers. May and Ghumman were lessee dealers who
operated gas stations and am/pm Mini Markets pursuant to
written franchise agreements with BPWCP.

   As lessee operators, they were required to pay monthly rent
and royalties on fuel sales. They could not discontinue the
ARCO brand at their facilities and had to renew their respec-
tive agreements with BPWCP every three years, or risk being
discontinued.

   Every year BPWCP’s Real Estate Manager and Regional
Sales Managers evaluate BPWCP’s capital investments and
the performance of its retail facilities in each of its markets.
The managers consider various economic, financial, and com-
petitive factors. The economic factors include sales and
growth patterns, and current and future demographics in the
markets. The financial factors include the present value of the
future estimated income from the facilities, the size of the lots
of the facilities, gasoline volume sales, sales from any am/pm
Mini Markets located on the facilities, the need to make
improvements or upgrades to the facilities, the ability to
expand the facilities, and the rate of return on the capital
investment in the facilities. The competitive factors include
the presence or absence of ARCO-branded and competing sta-
tions in the vicinity of the facilities, and regulatory barriers to
entry into the markets. In 2001, the managers considered the
above factors and recommended to the appropriate decision
makers that BPWCP sell all of its interests in the northern
Nevada market, including its interests in the facilities owned
4958           BP WEST COAST PRODUCTS v. MAY
by May and Ghumman. The recommendation to sell was
accepted.

   The real estate department arranged for the facilities to be
sold through a sealed bid process conducted by a marketing
company, the National Real Estate Clearinghouse (“NRC”).
The decision to solicit sealed bids in such a situation was
unique for BPWCP. Historically, when BPWCP desired to
sell property and maintain it as an ARCO-branded facility, it
typically negotiated directly with the dealer rather than solicit
bids. In this case, however, BPWCP notified May and Ghum-
man that it was considering recovering its capital investment
in their facilities, informed them about the sealed bid process,
and encouraged them to participate.

   As part of the bidding process, NRC marketed the facilities,
educated potential buyers about the process, and prepared
written materials and due diligence packages. The bidding
materials related that the properties were to be sold as opera-
tional ARCO and am/pm sites. The facilities included a man-
datory fifteen-year ARCO and am/pm branded franchise
agreement with BPWCP. The bidding materials also con-
tained confidential information regarding BPWCP’s fran-
chisees’ convenience store sales and gasoline volumes. The
materials further informed bidders that BPWCP reserved the
right to withdraw any property from the sealed bid sale at any
time, without notice, in its sole discretion. BPWCP also
reserved the right to overlook minor inconsistencies or non-
conformance in any bid.

   Under the NRC procedure, third parties prequalified before
submitting their bids by attending a NRC-conducted bid semi-
nar, and by providing information regarding their credit his-
tory and financial resources. The third parties had to make
their bids on a preset purchase agreement and include a bid
deposit equal to 2.5% of the sale price being offered. Success-
ful bidders had to increase their bid deposit to 10% of the pur-
chase price.
               BP WEST COAST PRODUCTS v. MAY                4959
   Through the above bidding process, an independent third
party, Bechara Victor Honein, offered to purchase May’s
facility for $1.4 million with a one-percent premium of
$14,000 for BPWCP’s cost in selling the facility. In making
his bid, Honein attributed $850,000 to the goodwill of the
business. As to the Ghumman facility, independent third party
Badru Khan submitted a bid of $890,000 with an $8,900 pre-
mium. In determining his bid, Khan included the value of the
“goodwill of an already functioning business along with the
existing customer base and income stream, belonging to such
business at the time of [his] bid.” (ER 1365, ¶ 6.) Neither
BPWCP nor NRC had any reason to believe that these third
party bidders would withdraw their offers or not close escrow
on the facilities.

   The third party bidders agreed to enter into a “contract
dealer” franchise with BPWCP by signing a fifteen-year fuel
supply and am/pm Mini Market agreement with BPWCP, if
the deal closed. This contract dealer relationship with the third
party bidders differed significantly from the expiring lessee
dealer franchise relationship. A contract dealer does not pay
rent, pays a lower royalty, and is not limited to the ARCO
brand after the initial franchise expires. A contract dealer also
must purchase additional equipment and materials, as well as
obtain all necessary licenses and permits (including a liquor
license and permit to operate the facility as an ARCO-branded
facility).

   After the bidding had concluded, BPWCP notified May and
Ghumman of its decisions to sell their facilities and nonrenew
their franchises. The notices cited to PMPA section
2802(b)(3)(D) and explained that BPWCP “ha[d] made a
determination in good faith and in the normal course of busi-
ness to sell the premises upon which [their facilities were]
located.” (ER 244.) BPWCP further informed May and
Ghumman that it would either make them a bona fide offer to
purchase their facilities or offer them a right of first refusal
4960           BP WEST COAST PRODUCTS v. MAY
(“ROFR”) if BPWCP obtained an offer from a third party to
purchase their facilities.

   On August 8, 2002, BPWCP offered May a ROFR to pur-
chase its interests in his facility for the same $1.4 million pur-
chase price offered by Honein. BPWCP also offered
Ghumman a ROFR to purchase its interests in his facility for
the same $890,000 offered by Khan. Unlike Honein and
Khan, May and Ghumman did not have to pay any premium
for buying the facilities. They were also not required to pur-
chase fuel from BPWCP and operate an am/pm Mini Market
franchise on the facilities for the next fifteen years. Instead,
BPWCP offered them the choice of buying their respective
facilities and either (1) entering into the same new contract
dealer relationship as Honein and Khan; or (2) continuing to
operate under their respective existing franchise agreements
until the end of their three-year terms, at which time they
could debrand and sell other gasoline, or cease selling gaso-
line completely.

   May and Ghumman obtained appraisals of the “As Is” fair
market value of the land, improvements, and BPWCP-owned
equipment in their facilities. May’s facility was appraised at
$1,030,000, rendering BPWCP’s ROFR offer 36% in excess
of his appraisal. Ghumman’s facility was appraised at
$410,000, rendering BPWCP’s ROFR offer 117% in excess
of his appraisal. Both May and Ghumman accepted BPWCP’s
ROFR offers “under protest” with reservation of all legal
rights.

   BPWCP filed a complaint with the United States District
Court for the District of Nevada seeking a declaratory judg-
ment that it had fully complied with the PMPA when it non-
renewed the franchises. May and Ghumman answered the
complaint and filed a counterclaim for damages, injunctive
relief, and declaratory relief for violations of the PMPA. Fol-
lowing extensive discovery, the district court granted sum-
mary judgment to BPWCP.
                 BP WEST COAST PRODUCTS v. MAY                    4961
                                  II.

   “The PMPA is intended to protect gas station franchise
owners from arbitrary termination or nonrenewal of their fran-
chises with large oil corporations and gasoline distributors,
and to remedy the disparity in bargaining power between par-
ties to gasoline franchise contracts.” DuFresne’s Auto Serv.,
Inc. v. Shell Oil Co., 992 F.2d 920, 925 (9th Cir. 1993). One
specific purpose of the PMPA is to protect a franchisee who
has built up substantial goodwill in a station from having the
franchise arbitrarily taken. See Brach v. Amoco Oil Co., 677
F.2d 1213, 1220 (7th Cir. 1982) (citing statement of Rep.
Mikva, 123 Cong. Rec. 10,386 (1977)). Despite the protection
offered to franchisees, the PMPA was also enacted to provide
“ ‘adequate flexibility so that franchisors may initiate changes
in their marketing activities to respond to changing market
conditions and consumer preferences.’ ” Unocal Corp. v.
Kaabipour, 177 F.3d 755, 762 (9th Cir. 1999) (quoting S.
Rep. No. 95-731, at 18-19 (1978), as reprinted in 1978
U.S.C.C.A.N. 873, 877).

   [1] To achieve these goals, the PMPA “establish[es] ‘mini-
mum Federal standards governing the termination and non-
renewal of franchise relationships for the sale of motor fuel by
the franchisor or supplier.’ ” Fresher v. Shell Oil Co., 846
F.2d 45, 46 (9th Cir. 1988) (per curiam) (quoting S. Rep. No.
95-731 (1978), as reprinted in 1978 U.S.C.C.A.N. 873). The
PMPA prohibits a service station franchisor from terminating
or declining to renew an existing franchise relationship unless
one of the conditions set forth in 15 U.S.C. § 2802(b) has
been satisfied.1 Pursuant to § 2802(b)(3)(D)(i)(III), a franchi-
sor may decline to renew a franchise agreement having a term
  1
   The franchisee bears “the burden of proving the termination of the
franchise or the nonrenewal of the franchise relationship.” 15 U.S.C.
§ 2805(c). The franchisor then bears “the burden of going forward with
evidence to establish as an affirmative defense that such termination or
nonrenewal was permitted under section 2802(b) or 2803.” Id.
4962            BP WEST COAST PRODUCTS v. MAY
of three or more years and decide to sell such premises if such
“determination [is] made by the franchisor in good faith and
in the normal course of business.” Before selling leased mar-
keting premises, a franchisor must “either: (I) [make] a bona
fide offer to sell, transfer, or assign to the franchisee such
franchisor’s interests in such premises; or (II) if applicable,
[offer] the franchisee a right of first refusal of at least 45-days
duration of an offer, made by another, to purchase such
franchisor’s interest in such premises.” 15 U.S.C. § 2802(b)
(3)(D)(iii).

   [2] Section 2802(b)(3)(D)(i)(III)’s good faith requirement
“looks to whether the franchisor’s actions are designed to
‘conceal selective discrimination against individual fran-
chises.’ ” Kaabipour, 177 F.3d at 767 (citation omitted).
“This good faith test is meant to preclude sham determina-
tions from being used as an artifice for termination or non-
renewal.” Valentine v. Mobil Oil Corp., 789 F.2d 1388, 1392
n.7 (9th Cir. 1986) (quoting S. Rep. No. 95-731, at 37 (1978)
as reprinted in 1978 U.S.C.C.A.N. 873, 895-96). The test for
determining good faith is subjective, and the court should
look to the franchisor’s intent rather than the effect of the
franchisor’s actions. See Svela v. Union Oil Co. of Cal., 807
F.2d 1494, 1501 (9th Cir. 1987). Objective evidence, such as
internal company documents, may provide adequate proof of
good faith. See Valentine, 789 F.2d at 1393 (relying on
franchisor’s business plans).

   [3] A franchisor meets the “normal course of business”
requirement if the determination was “the result of the
franchisor’s normal decision making process.” Valentine, 789
F.2d at 1392 n.7 (quoting S. Rep. No. 95-731, at 37 (1978) as
reprinted in 1978 U.S.C.C.A.N. 873, 895-96). “In determin-
ing whether [a franchisor] made its decision to withdraw in
the normal course of business, the evidence indicative of good
faith is likely to be instructive.” Beck Oil Co. v. Texaco Ref.
& Mktg., Inc., 25 F.3d 559, 562 (7th Cir. 1994).
               BP WEST COAST PRODUCTS v. MAY              4963
    The inquiry of whether the franchisor made the substantive
decision in good faith and in the normal course of business
“tests the honest commercial judgment of the franchisor.”
Sandlin v. Texaco Ref. & Mktg., Inc., 900 F.2d 1479, 1481
(10th Cir. 1990). “These tests provide adequate protection of
franchisees from arbitrary or discriminatory termination . . .
yet avoid judicial scrutiny of the business judgment itself.
Thus, it is not necessary for the courts to determine whether
a particular marketing strategy, such as a market withdrawal,
. . . is a wise business decision.” Massey v. Exxon Corp., 942
F.2d 340, 345 (6th Cir. 1991) (quoting S. Rep. No. 95-731, at
37 (1978), as reprinted in 1978 U.S.C.C.A.N. 873, 896);
accord Svela, 807 F.2d at 1501 (noting that Congress did not
intend for courts to intrude into the marketplace by permitting
“judicial second-guessing of the economic decisions of
franchisors”).

   [4] The district court ruled as a matter of law that BPWCP
made the determination to sell the facilities operated by May
and Ghumman in good faith and in the normal course of busi-
ness. To establish its affirmative defense, BPWCP presented
substantial and uncontradicted evidence that the sale process
above took place because its Real Estate Manager and
Regional Sales Managers recommended that it sell its facili-
ties in the northern Nevada market based on a routine annual
review that evaluated numerous economic, financial, and
competitive factors. After obtaining bids on the facilities,
BPWCP notified May and Ghumman of its decision to sell
their facilities and nonrenew their franchises.

   May and Ghumman contend that there is a genuine issue of
material fact as to whether BPWCP’s decision to sell their
facilities was made in good faith because BPWCP’s bidding
structure and conduct forced third parties to include business
goodwill value that belonged to May and Ghumman in their
bids. In support of their argument, they note that BPWCP
wanted to sell locations that could continue to be operated as
ARCO gas stations by the dealers that purchased them. The
4964            BP WEST COAST PRODUCTS v. MAY
sites were to be sold as operational sites with a fifteen-year
franchise agreement that was mandatory to all third party bid-
ders. Furthermore, May and Ghumman argue that BPWCP
deliberately advertised confidential convenience store sales
and gasoline volumes of its franchisees for third party bidders
to consider in their bid. BPWCP created an incentive for third
parties to bid higher values by providing for a “break up fee”
based on a percentage of the overall bid price. In addition,
May and Ghumman observed that the bids on their facilities
were much higher than the fair market appraised values which
they obtained. Accordingly, they contend that the third party
bidders considered goodwill in their bids. Finally, Khan
admitted that he included the value of the goodwill in his bid
on Ghumman’s facility, and Honein acknowledged that he
included the goodwill value in his bid on May’s facility.

   [5] Even if the bid process encouraged bidders to include
goodwill value, however, the PMPA does not protect against
the loss of goodwill as such. Nothing before us indicates that
the decision to sell was motivated by any reasons or concerns
except pure business considerations. Obtaining the value of
goodwill in the sale of the facilities does not constitute evi-
dence that BPWCP’s initial determination to sell was made in
bad faith; i.e, that the determination to sell involved selective
discrimination, procedural irregularities, or was a pretext for
nonrenewal. Absent some evidence of bad faith in the initial
decisionmaking to sell the facilities, we are precluded from
second-guessing BPWCP’s economic determination to with-
draw from the market in northern Nevada and sell these facili-
ties. See Svela, 807 F.2d at 1501.

   [6] May and Ghumman also claim that BPWCP did not
decide to sell the facilities in the normal course of business
because historically BPWCP would negotiate directly with
the dealer rather than solicit bids if it wanted to sell a property
and keep it as an ARCO-branded facility. While the record
reflects that BPWCP’s bidding process was novel, the deci-
sion to set up the bidding process occurred as a result of the
               BP WEST COAST PRODUCTS v. MAY              4965
yearly evaluation performed by BPWCP’s Real Estate Man-
ager and Regional Sales Managers. Because the decision to
set up the bidding process occurred during BPWCP’s normal
decision making process, May and Ghumman have failed to
establish a genuine issue of material fact as to the normal
course of business requirement.

   [7] Finally, May and Ghumman also assert that BPWCP
accepted a bid from Khan on the Ghumman facility even
though he was not a “ready, willing, and able buyer.” They
contend that Khan was not a “ready, willing, and able buyer”
because he had not obtained a loan prior to BPWCP’s condi-
tional acceptance of his bid. The bidding procedure required
third party bidders to make their bids on a preset purchase
agreement and include a bid deposit equal to 2.5% of the sale
price being offered. Successful bidders had to increase their
bid deposit shortly thereafter to 10% of the purchase price.
We are satisfied that this procedure is sufficient to produce a
ready, willing, and able buyer.

                             III.

  For the reasons set forth above, we find no error in the
order of the district court granting summary judgment to
BPWCP.

  AFFIRMED.
