Two Demons board members, president Don McLardy and colleague Stuart Grimshaw, resigned last week and the club anticipates more will follow as an internal review of the board, to be completed in late June, continues.
After Monday morning's press conference to announce coach Mark Neeld had been sacked, Kennett said it appeared "the AFL and Peter Jackson are going to be responsible for who forms the Melbourne Football Club board".
He said the AFL had shown no understanding of the principles of good governance and "Andrew Demetriou may as well appoint himself as president".
"If the AFL go down this path, and I suspect they will, the public ought to understand that the Melbourne Football Club now is owned and operated lock stock and barrel by the AFL," Kennett told AFL.com.au.
"It reinforces that the AFL is fundamentally taking control of the Melbourne Football Club and they alone will be responsible for the success or otherwise of the Melbourne Football Club.
"It's quite frightening what they're proposing."
Kennett, who has written to League chairman Mike Fitzpatrick, wants the AFL to remove the entire board this week and clear the path for him to take over in the wake of Neeld's sacking.
The former Victorian premier said he wants to head a four-man Demons board, but doubts it will happen.
"I will lay you London to a brick that the AFL will appoint people they're comfortable with and therefore the governance issue that is the relationship between the board and its CEO will be forever compromised," he said earlier on 3AW.
Kennett said Jackson's restructure of the football department, which included Monday's sacking of Neeld, couldn't solve all of Melbourne's problems and the club also needs a strong and independent board.
"If in fact the board is sycophants to the AFL or to Peter Jackson, the governance issues at Melbourne will only get worse," he said.
"The AFL in offering to continue to financially support Melbourne should request the board's resignation totally then put in a small new board for a short period of time, maybe two or three years, to assist Peter Jackson in delivering the turnaround."
Nathan Schmook is a reporter for AFL Media. Follow him on Twitter: @AFL_Nathan
