I think Friend two should back off... If he was a good friend that is, Or market Friend 1's idea in another market. But of course Friend 2 will argue that he/she contributed to Friend 1's Idea/success and is entitled to be in on it.

Every client that Friend 2 takes, is a potential client for Friend 1, if they're using the same means of marketing then it is almost certain that if friend 2 wasn't in the business, that friend 1 would have received the same customer.

That is straight up theft IMO