Of course, I'm not in this position, nor is anyone else you'll get an answer from here, so there's what we feel is right (which, not being in your position, we would then tell you to do) and there's what we might actually do in your situation, faced with the actual consequences of the decision (like being out of work or maybe even blacklisted).
You're right that the obvious thing to do is get the hell out. Honestly, if my recommendations from that company were predicated on doing homework for children I'm not real sure I'd want them. Job applications have a "may we contact your employer" checkbox for a reason, and trust me, there are MANY reasons to check this box which do not reflect poorly on you. I think this qualifies.
The very first thing I would do if I were your friend is to check to see if I was being asked to commit a crime. Obviously it's plagiarism for the student, but if the author knowingly writes something for another person to hand in, it might be criminal fraud for the author as well. If this is true, most jurisdictions consider it wrongful or retaliatory termination (translated: illegal) to fire an employee for failure to perform an illegal act, and/or for reporting the request to perform such an illegal act to the authorities. There may be a "whistleblower act", or it may be considered in the interest of "public policy" (similar to firing an employee who files a workman's comp claim; if that were allowed, workman's comp would be useless). So, if your friend were to refuse, and was subsequently fired for failure to comply, she should hire a lawyer and file suit for wrongful termination. Any lawyer who heard that story would take the case on contingency and tack his fees on to the stipulated damages.
If your friend actually commits the illegal act, and then reports the crime, she might still claim duress, but it would be harder, as an "at-will" employee, to argue that she was forced to commit the crime; ethically, she could have walked away ("it's just a job"), so she should have, and thus she is culpable for the crime if she commits it, making performing the action and then reporting it a very bad idea (she'd be basically turning herself in; a good thing to do, but she should definitely not expect a medal for it).
If it's not a crime, it's at least extremely unethical. If I were her, I would be trying very hard to find out which schools and colleges the boss's children attend, and inform them (anonymously perhaps) that the assignment for such and such a student was produced entirely by someone else at the behest of the student's father, and that they should reconsider the student's grades and possibly their continued enrollment (if they're in private schools, the code of conduct usually prescribes expulsion for plagiarism).
I will decline to speculate on what I, personally, would do in your friend's place with regard to actually doing the homework assignments. It's not useful to the discussion and would invite criticism either way. Suffice to say, if my boss considered me to be of so little value that he assigned me his children's homework, I would be looking for any way out that I possibly could, and I would not be shy in explaining why I wanted out to other prospective employers.