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Chief
Your client didn't even have to ask you. It was a courtesy.
I don't know anything that would restrict your client from sharing the form and the friend from using it, so don't try to limit their use of it. But you should suggest that (1) the form was drafted with your client's particular business and particular needs/concerns in mind, not the friend's, and (2) that the friend is free to use it but should really have someone (like you!) work with them to make sure it really suits their needs.
Chief
^This. Also remember that imitation is the sincerest form of flattery. This also happens all the time. I used to do a lot of soft IP litigation, including trade secret/noncompete cases and related document drafting. More than once I was hired to represent a party in a case in which the other side was relying on my standard form restrictive covenant agreement, which had become widely circulated in a tech focused business community where I practice. The good news for my clients in those cases was that I knew the nuances in the agreement better than the other side did.
Anyway, consider this a compliment and do exactly as A1 says.
That’s what I ended up telling them. Thanks for the thoughtful consideration!