The Construction Industry Council says some subcontractors are finding themselves out of pocket as building projects fall over around the country.
Three David Reid Homes franchises have collapsed in the past few months, the latest being Wellington, which was forced into liquidation on Monday.
The council's head, Richard Michael, says subcontractors usually suffer when economic downturns put pressure on building companies.
But Mr Michael says the 2002 Construction Contracts Act means subcontractors are no longer exposed for huge amounts of money, and it should not mean the complete failure of their businesses.
The Pukekohe and Marlborough franchises of David Reid Homes have also folded recently. The company has 23 franchises around New Zealand.
Despite the collapse, general manager Ben Allan is confident the company is strong.
Mr Allan said demand in some areas of the market continue to be buoyant.
He said interest rates falls and stronger immigration flows could provide the necessary impetus for an improvement in the building sector.