Friends hi-fi system not very good, what do you do or say?

I reference the brand of their gear and say "they make some really good stuff." 

I also say that "we're a dying breed...most people don't have any pride in their gear if they have any gear at all...glad to see you are enjoying it." 

That said, I have a relationship with a close friend where we are more direct and honest.  He told me my Focal BE tweeters were too bright once and I could never enjoy those speakers again. He insisted I fly down for his birthday and I said I wouldn't unless he ordered a separate DAC and preamp to assume 2-channel duties from his AVR and we'd install while I was there. Before we installed the gear he wanted me to compliment his speakers.  I said they had potential and just wait an hour. We got the new (used Parasound) amp and DAC/preamp installed and his jaw hit the floor.  But this was a long debate we'd had for years so it wasn't like he wasn't ready for the stipulation. 

Have a heart and check out their albums, the sound ain't that bad.

@emergingsoul It depends on how well I know the friend would determine how I respond to them asking me what do I think about their system.  It’s hard for some people to receive respectful feedback about their system after they actually asked for the feedback.  That’s why I would have to know the personality of the friend before I offer feedback.  If I was comfortable offering feedback because I know the person would not get upset, I would still share my feedback by advising that the listening experience is all subjective, so I’m just sharing the sound qualities that I look for in my system.  If they want to take my advice, good, if not, no sweat.  I just want to listen to music and avoid a beef over a subjective hobby.

I would turn it around on them- ask them right back and say well what do you think?  They’ll most likely say yes.  Then ask is that the sound your going for?  ….the conversation will ensue naturally….

     Someone said, "Honesty is the best policy. There’s a lot less competition."

                          I’ve found that apropos, in most situtations.

     Educating others, regarding good sound and how to listen and adjust for accurate/articulate reproduction, kept me in busy and prosperous in the sound industry, for decades. (appreciated by most)

     But then: if someone’s happy with what their system’s sound and/or listening preferences; who am I to tell them they’re wrong? (always been my perspective)

                                                  Happy listening!