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Can Registering Your Local Business Hurt Organic Rankings?

Greetings from inside the SEOigloo!
This week, I started a local search thread at Cre8asite Forums. My friend, Kulpreet Singh, asked a question that I felt was so good, and likely to be of concern to so many local business owners, that I am going to post it here and ask for my readers’ to please weigh in with their opinions on this:

I was wondering – so if you register with Google’s local business center, does it automatically begin to cut away from your rankings on keywords with the names of other cities?
This is one of the doubts that prevented me from signing one of my business websites up as local. We are also optimized for other cities, but could do better in rankings for our own city / province.

I can really see the reasoning behind this question, and am betting that many people would be wondering the same thing. This is how I answered Kulpreet Singh:

My *feeling* on this is that because local appears to be governed by its own algo (talking about Google here) ranking well within Maps for a specific city is not going to affect your organic rankings for a broader range in the organic SERPs. The organic rankings will be based on your on-page/linking/user behavior/SEO factors, whereas the local rankings will be based upon proximity to city centroid/category/maybe user ratings, etc.

I would really appreciate it if you would take the time to comment on this subject. Do you see any danger of registering with Google’s Local Business center limiting your organic ability to rank well for other cities and regions beyond the one your LBC listing is built upon?
Your thoughts much appreciated.