Managing director Michael Renwick said the company had been working very hard behind the scenes, but had not been able to resolve the situation with franchise owners Tony and Narelle Schultze.

The Schultzes, who constructed houses for Hotondo across the south-west, left a message on their answering machine this week saying they had ceased trade and that clients should contact their building insurer.

The collapse affected at least a handful of homes that are under construction and left suppliers and tradesmen thousands of dollars out of pocket.

Mr Renwick said head office was officially notified by phone on Wednesday that the Portland franchise had ceased trading.

He said the franchise agreement between Hotondo Homes and the Schultzes had now been terminated.

He described the collapse as “an isolated and unusual incident”.

“Contractual matters between Hotondo Homes and its franchisees are commercial in confidence, however we can assure all our stakeholders that we will meet our obligations as franchisor.

“We have been in contact with some customers directly affected by this incident and have advised them what we know and their options, especially in regards to home warranty insurance.

“It is comforting knowing that customers are normally looked after by home warranty insurance.

“We have also been in discussion with the warranty insurer, attempting to expedite any claim.”

Mr Renwick said Hotondo Homes held a meeting with the Schultzes a couple of weeks ago to “discuss current issues”.

“We have been concerned for some time and have been working to acquire financial information from AC and NC Schultze Pty Ltd as trustees for Schultze Unit Trust, trading as Hotondo Homes Portland, and despite trying to obtain this information and assist them, we were unsuccessful in avoiding this regrettable situation.”

Mr Renwick said the company was sorry to hear the franchise had ceased trading: “We pride ourselves on the success of our franchisees and provide them with extensive advice, training and support.

“We can assure all of Hotondo Homes franchisees, employees, customers and suppliers that this is an isolated incident which has no impact on anyone other than those associated with the individual Portland franchise. This incident does not affect other Hotondo Homes franchisees.

“Hotondo Homes will meet all its obligations as franchisor in this matter and will co-operate as much as possible with any administrator to understand the potential impacts of their situation and assist where we can.”

Mr Renwick said the situation was an indication of how hard it was to survive in the building industry.

“The building industry is extremely volatile at the moment and this is tribute to the difficulty of the market and the industry in which we operate.”

malexander@standard.fairfax.com.au