I have to disagree. It might not be issues at all. I'm having the exact same problem with my parents. Both grew up in the fields, both had dogs and other animals. Kaji is our first "house dog" and being that he's so small, playful, and childlike, they are taking their roles as grandparents very seriously and spoiling him rotten! That means, extra treats, no correction for accidents, the wrong kind of treats (made him throw up a few times), and letting him get away with murder because he's so cute and so small that he can't possibly do anything wrong, right?
Talk to him. Tell him that yes, she's daddy's princess, and it's up to daddy to teach his princes proper princess etiquette. When you talk to him don't do it in the heat of the moment. That was my mistake and now my dad doesn't want anything to do with him because "I get mad".
If only they would meet me somewhere in the middle....