There are some different possibilities. This could be ringworm which you can read about and see pictures of here
www.marvistavet.com/html/body_ringworm.html
It could be from a flying insect bite such as a deer or horse fly etc.
It could also be from a tick bite and be an indication that the dog has picked up a tick carried disease. You can read about those here
http://marvistavet.net/html/body_lyme_disease.html
and the page has pictures of the rash seen too.
If you think this could be ringworm or lyme disease then you need to see a vet.
If you think it might be fly bites you can get a repellent at the pet supply store for your dog.
Hope this helps you!
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