The head of one of Australia's largest bakery chains, Brumby's, has quit after revelations he urged franchisees to increase prices and blame it on the carbon tax.

In an internal memo sent on Thursday night, the company announced that Brumby's managing director Deane Priest tendered his resignation on Thursday afternoon.

Mr Priest had authored the original newsletter which suggested franchisees increase prices during June and July and "let the carbon tax take the blame".

The bakery chain is part of the publicly listed Retail Food Group, which also owns Donut King and Michel's Patisserie.

The company's marketing and innovation director, Tracey Catterall, has moved to reassure franchisees that plans are in place to try to "win back the hearts and trust" of Brumby's customers.

In a memo obtained by the ABC, Ms Catterall says the company plans to take out full-page newspaper advertisements this weekend and has also engaged a "social media expert" to respond to customer concerns.

She has also asked franchisees to remove any Liberal Party placards that mention price impacts due to the carbon tax.

"We have not had the opportunity to inspect these placards and therefore have not formed any opinion as to their legality," Ms Catterall wrote to franchisees.

"Both RFG (Retail Food Group) and the Brumby's Bakery system are apolitical organisations.

"Consequently... we would ask that any franchisee who continues to display the placards referenced above immediately remove them from their business premises."

The Coalition sent out posters for small business owners to display in their shop fronts to explain that prices would be going up under the carbon tax.

But the Government has warned that businesses face fines of up to $1.1 million if they make misleading claims about price impacts.

On Wednesday, Assistant Treasurer David Bradbury described Brumby's behaviour as "reprehensible" and accused the company of trying to "rip-off" their customers.

Retail Food Group says it is trying hard to turn about the negative publicity and has sent franchisees a script for staff to use when dealing with customers' complaints.

It suggests staff apologise that "head office" made comments about the carbon tax and price rises.

"We hope that this won't taint the wonderful experience you have had with us for many years," the script goes on to say.