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@squirrel
I've just heard from my friend and asked about where he bought the bike - an LBS where he lives. He chose them specifically because they are local and he liked their attitude. We'll see whether that attitude remains when it comes to sorting this problem out.
Apparently the chain snapped and got caught between the wheel and the chain-stay so there might be some damage to the chain-stay. My friend said that provided the only damage is the chips out of the paintwork, he'll not be too worried, but if the chain-stay is bent...
I didn't think about the slack-chain issue, but I would have thought that the bike should have been in perfect working order when it was rolled out of the shop. I'll post again once my friend has taken the bike back this evening.