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This paper aims to ascertain the need for physical proximity between industry and business services by analyzing the situation of industrial territories with respect to business services. A comparative statistical analysis conducted in the regions of mainland France shows that operational services are relatively well developed but that knowledge-intensive business services are underdeveloped in French industrial territories. We ask whether a co-location of clients and service providers is necessary in each particular industrial territory. A literature review on location-related factors for business services focused on factors influencing the constraint of physical proximity to clients leads to the conclusion that such factors generally strengthen physical proximity to clients for operational business services but that they do not have an unequivocal influence on knowledge-intensive business services. For the latter, other forms of proximity than co-location are determinant, and physical proximity should be seen as complementary rather than substitutable in relation to remote interactions. Our study of the location of knowledge-intensive business services in the automotive industry emphasizes the fact that physical proximity to industrial clients is more important than metropolitan effects in industrialized territories where there are only mid-sized cities, such as the Franche-Comté region.