Sometimes, the fear of the unknown contributes to out biggest fears. It might not be a bad idea to expose them to friendly, innocuous, and harmless dogs (not puppies) first.
They may be afraid because they have little to no experience with the positive sides of owning a dog.
When exposing your kids to dogs, make sure you take it one step at a time. Start small and work your way up. Maybe introduce them first, then move on to petting. Then, so on and so forth.
Make sure your kids know the etiquette of being around dogs. As kind and cute dogs are, they are still dangerous to some capacity. Make sure your kids aren't being rough or provoking the dogs. After all, dogs are afraid of us as well sometimes.
http://pets.webmd.com/dogs/features/helping-your-child-overcome-a-fear-of-dogs
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