We did some experiments:
One website was #1 for certain keyword for one location. Then we created different website for for same industry in different locality. We linked from main website to new website and surprisingly for same keyword the new website did show up on the first page even though it is more difficult locality to grow in.
What I'm trying to say if there is new domain perhaps it won't be bad idea to put a link to new website from Main site. Of course it is up to you.