#Megxit – A business perspective on Harry and Meghan leaving the family firm

2020 may only just be a month old but it has already been dominated by enough royal headlines to take up a whole year, thanks almost entirely to the Duke and Duchess of Sussex announcing their intention to renounce their royal titles and step back from their duties as senior royals.

With the ensuing speculation, press outrage and rumours of sordid family squabbles, the affair has at times resembled an episode of Succession. But the similarities to the problems faced by a family business go beyond mere drama.

In this piece we’ll examine some of the aspects of Harry and Meghan leaving the Royal Family and what they could mean from a business perspective.

Liquidating the agreement – Megxit as a dissolved franchise agreement

The Duke and Duchess of Sussex leaving the Royal Family is in no way as simple as them making an announcement and then the next day stepping away. So, firstly, under what grounds could such a messy divorce be justified?

If we think of Meghan and Harry as franchisees of the Royal Family then this gives us an interesting insight into their decision to step away. While they are no doubt motivated by desires to pursue their own business and charity interests (more on that later), their departure from the Royal Family perhaps hints at dissatisfaction with the family (or franchise) itself.

Generally, a franchisee opting to leave a franchise generally relates to conduct on the franchise’s, or franchisor’s, part. It is no secret that the Harry and Meghan have endured a tempestuous relationship with the notorious British press, with a widely held view that Meghan is the victim of unduly negative press, to say the least.

However, the Sussexes must have known that formally stepping away from the Royal Family would, for the short term at least, not lessen the press fixation on them, but rather dramatically magnify it.

It is possible to suggest then, that Harry and Meghan have sought to dissolve this “franchise agreement” as they feel the Royal Family is incapable of offering them protection from this kind of press scrutiny and that they would be more able to tackle this as their own entity.

Through this they may have better control over press coverage of them and not be so bound by the Royal Family (much has been made of their decision to opt out of the “Royal Rota” system of press privilege).

Conversely, one may look at this from the franchise perspective. One report that has been widely circulated since their announcement was that the Sussexes were, essentially, pushed out of the Monarchy. Royal reporters Tom Bradby of ITV and Robert Lacey of the Washington Post, both said that senior royals had advocated slimming down the Monarchy, potentially to the point of excluding Harry and Meghan.

So, why might this be? Generally, a franchisor will seek to end a franchise agreement in order to protect the core business, if, for example a franchisee’s conduct or profile has come under scrutiny.

Meghan and Harry’s high-profile is well-known. By Royal standards they are both rather outspoken, at least in comparison to Prince William and his wife Kate, who will one day ascend to the throne. It is possible that the Monarchy wants to steer away from this type of press attention and run itself more quietly and under the radar.

Senior royals will also be aware of the changing political and social climate. While the Royal Family certainly remain popular, it is still the case that the Royal Family will need to adjust as times change. For this reason, perhaps the idea of a “slimmed-down” Royal Family seemed like the logical next step, and perhaps the Duke and Duchess of Sussex just didn’t fit in to that.

How should the business proceed?

Meghan and Harry say they intend to split their time between the UK and Canada. While there has been little clarity on how this will be funded (in terms of travel costs, security detail etc), Prince Charles has confirmed that he will provide private financial support to the couple as they seek to establish themselves.

This raises the question of how the wider Royal business should proceed in terms of its ongoing relationship with these former employees.

Family business expert Nigel Nicholson says that the role of the Royal Family in terms of supporting the Duke and Duchess of Sussex should be “part VC fund and part educational charity”. Simply put, resources should be provided to help them follow their goals and set them on the right path so that those goals are clear, reasonable and are “non-competitive” with the Royal Family.

For a “family business” like the Royal Family itself, Nicholson says that, despite the rapidly changing modern world, it can still thrive. So, even without two of its youngest, most prominent and most culturally-aware members, the Royal Family can continue to flourish in the long-term due to its existing longevity, its commitment to its own future and it’s long-standing, value-driven business model.

However, Nicholson points out that the challenge for the Royal Family now is to be savvy in the digital age through “reverse mentoring”: with senior figures calling on the younger generation to modernise the business utilising their increased awareness of digital culture.

What problems could the future hold?

Meghan and Harry have stated their aim to be “financially independent”, while that may seem a long way off amid the ongoing negotiations and furore, what might it involve when they achieve their goal?

The young couple have been urged to learn from the ordeals of Prince Andrew and Sarah Ferguson and instead model their “afterlife” business on Barack and Michelle Obama, who, like the Blairs and the Clintons, have turned life after a career in the public eye into an incredibly lucrative business.

However, one of their earliest efforts has already lead to a discussion about how their future ventures might clash with the institution they used to serve. In June last year, Meghan and Harry began registering branded products from clothing to health and wellness retreats under the trademark “Sussex Royal”.

It has been suggested that attempts to profit from this brand could pose a dilemma for the Monarchy and that royal approval for such commercial projects will be part of any discussions the couple has with the Queen.

Pauline MacLaran, Professor of Marketing at Royal Holloway, University of London, called the issue a “major problem” for the Sussexes and further commented: “The family has clearly been managing itself as a brand and its members as a brand complex (...) it relies on control.”

It seems clear that one of the many challenges that Harry and Meghan will face in their new life is pursuing business ventures without seeming to be cashing in on the Royal brand and without infringing on the Monarchy. Whatever happens, one thing that’s certain is that this is a story that will carry on for years and not just be forgotten next month.

If you’re considering investing in or acquiring a family business, then click here to read our buyers’ guide. Or, if you’re a part of a family business and want to try something different, then read our guide to Selling a family business.

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