I am having a problem with my grandparents and where they stand in my daughters upbringing...?

My daughter is almost 4 years old and has been in MY grandparents (her GREAT grandparents) lives since day one. Now, she is getting older and becoming more her own person and very demanding sometimes. Anyways, tonight my grandfather had a HUGE blowout at me because I would not allow her to eat potatoe chips and he went ahead and gave her a handful right in front of me. I told him he was out of line and made me look like a bad guy all the time. He got in my face and said he was going to take me to court for custody of my daughter, which that I am NOT worried about because he and my gramma are in their 70s and would not be granted but he says he will see to it that she at least be placed in foster care.....HE says I am being unreasonable in my parenting and that I need to just let her have what she wants sometimes. I am a type 2 diabetic and she has over 40 percent chance of developing the disease later in her life as well. I try to watch what she eats and limit her CRAP intake.