Operating an escort service isn't necessarily illegal, however offering certain types of services might be, depending on the local laws.
Note that prostitution is actually legal in some countries (I believe New Zealand, Australia, Belgium, The Netherlands are several examples).
You should consult your local authorities on the legality of the business model your friend wishes to pursue. The city police chief or your county's district attorney's office should be able to give you an authoritative answer.
Only then can you determine whether or not it's a good or bad idea, at least from a legal standpoint.
From a moral or ethical standpoint, no one here can make that decision for you. It is entirely yours.