A string of businesses in the franchised David Reid Homes have gone to the wall lately, a move its chief has blamed on the construction downturn.
David Reid Homes Wellington went into voluntary liquidation this month leaving at least 10 houses half-built and owing contractors thousands.
That followed problems with the Manawatu, Pukekohe and Marlborough franchisees.
Ben Allen, David Reid Homes general manager, said the downturn in new-house starts had an impact on the business.
The Franklin franchise shut just before Christmas and it was going through the liquidation process, he said. About $1.7 million is thought to be owed, an amount which Allen said included loans and claims by subcontractors.
David Reid claims to be New Zealand's largest builder of houses in the $400,000-plus category and Allen said few people were left suffering.
"There have been a number of franchisees who have exited the business in the last 24 months. All except the Wellington franchise have been replaced with new franchisees and are operating successfully.
"The reasons for exit differ by franchise but the credit crunch and subsequent downturn in the demand for new homes has certainly exacerbated each particular situation. The current environment is particularly unforgiving.
"In the context of the current market, the group as a whole is performing well and it would be very disappointing if several operator issues were to reflect negatively on the wider group," Allen said.
David Reid Homes had completed all customers' homes to the original plans and specifications in the event of a franchisee failing to do so. In Wellington, 10 homes were being completed by David Reid Homes Kapiti.
Allen said David Reid Homes intended to appoint a new Wellington region franchisee.
THE COMPANY
* Has 22 franchised offices.
* Business started in 1993.
* Founded in Christchurch.
* HQ now in Lower Hutt.
