Winchester City Council's planning committee heard the objection when considering plans for the fast food outlet on Solent Way, Whiteley, near Junction 9 of the M27.
Wendy Backwell, a Whiteley resident, told the committee her friend had died at home whilst waiting for an ambulance that was stuck in heavy traffic.
She asked: 'would my friend still be alive today if the road wasn't gridlocked?'
In January this year, Hampshire County Council approved a £22.2m plan to upgrade roads around Junction 9, including the Parkway South Roundabout leading to Solent Way.
Councillor Jane Rutter said: 'We understand there are huge concerns about traffic.
'The council is supposed to be building relief roads in the area, and the restaurant was planned to be built at the same time.
'As I said at the meeting, this would have created a perfect storm of traffic issues.'
Despite concerns about congestion, the plan satisfied the council's traffic control standards.
Cllr Rutter explained that the plan was rejected due to it not meeting the area’s zoning classification.
She said: 'It was rejected because it went against policy. That area is set aside for to increase employment - businesses like warehouses and office units.
'You have to be aware of all the issues affecting development.'
A representative from Winchester City Councillors Biodiversity Team had expressed concerns about the proposed location of the restaurant, which is designated a site of importance for nature conservation.
The KFC would have created 55 jobs including 22 full time and 33 part time.
The American fast food chain has only one franchise in Fareham, a drive-thru restaurant in Fareham Trade Park on Lederle Lane.