A butcher has been told to take down a sign showing five sausage rings in the shape of the Olympic logo.
The Olympic Games logo can only be used by official sponsors
Olympic officials have told Dennis Spurr, from the Fantastic Sausage Factory in Weymouth, Dorset, the international logo is "protected".
Mr Spurr has been given two verbal warnings but refuses to comply. He put up the vinyl sign, which he said is just a "bit of fun", a year ago.
The Olympic sailing events will be held in Weymouth and Portland in 2012.
"I have been told twice by someone from a local committee that it's been reported to London, and if I don't take it down soon I could get into a lot of trouble," he said.
"I can't see the need to take it down - it is just a bit of fun to make people smile.
"It is so inoffensive and it is promoting the sailing events here in Weymouth.
"Lots of local people don't even know it's happening here yet."
The shop on St Mary's Street is just a short walk from the shore where thousands of spectators will gather in five years' time to watch the events in Weymouth Bay.
Mr Spurr is popular for his creative sausages such as the Tom Jones sausage - made of pork and leek and the Beckham - made of pork and "posh spices".
"If the Olympic committee wants to come down here to talk about it I will put on a barbeque for them," Mr Spurr added.
The organisers of the Olympics in London said although they do not comment on individual cases they have to protect the logo from being exploited by businesses.
Dennis Spurr put the sign up last year to make his customers smile
Official sponsors are expected to contribute £2bn to the event.
A spokesperson from London 2012 said: "When we won the right to stage the London Games, the International Olympic Committee charged the London Organising Committee with making sure that the Olympic rings and Olympic terminology are protected in the UK.
"We therefore don't have discretion to ignore inappropriate uses - we are obliged to address them."
It is understood Olympic officials could use copyright laws to sue Mr Spurr unless he removes the sign.
Some of the Fantastic Sausage Factory's customers have offered to start a petition in protest.