I believe you can with Domain->Manage in your Control Panel. Once you transfered your friend domain to your account, you will be able to edit the Web service in this menu. By default it should create something like /home/yourUserName/hisWebsite. You will want to change that to /home/hisUserName/hisWebsite. See below how to create a new user with ftp.
There is a easy way to setup a ftp account for your friend. In control panel, choose Users->Users then press the "Add New User" link. Your friend will now be able to ftp to yourSite.com, enter his username/password and be directed to /home/yourFriendUserName. He will have to change directory to "hisWebsite" and upload his files.
The only downside to this is that only one user can use CGI/PHP-CGI.