Waikato Rugby has denied any involvement in McDonald's "racist" golliwog display in its Te Awamutu restaurant.

The black doll is wearing a Waikato rugby jersey and standing over a McDonald's rugby ball.

"It's a surprise to us. We have nothing to do with it," says Waikato Rugby spokesperson Joel Skulander.

"We don't condone this."

Customer Will Moreland went in to the store on Saturday, and was outraged by the caricature.

"I went into the local McDonald's and it was on the front counter," Mr Moreland told Newshub.

"They were advertising a raffle for the local Ronald McDonald House."

Mr Skulander says Waikato Rugby is considering its options.

"We're going to sit down on Monday when everyone's back in the office and work out a strategy," he says.

Once a popular children's toy, golliwogs are nowadays considered racist and dehumanising towards African-Americans by many. Mr Moreland said he was offended by the display.

"It was probably about a metre tall - it was made out of wool and stitched together."

Mr Moreland says it's an unacceptable way to raise funds.

"I didn't think it's appropriate - I think there's a lot of racist images which the golliwog portrays.

"I don't think such views are welcome in New Zealand."

McDonald's has told Newshub the fundraising with golliwogs would be discontinued.

"McDonald's Te Awamutu regularly raises money for Ronald McDonald House, and has not had any direct complaints about past or current fundraising activities," a McDonald's spokesperson says.

"That said, we acknowledge the sensitivities that exist with certain types of dolls, and have asked the franchisee not to do this type of fundraising going forward."

Newshub.