You know that saying "Keep you friends close and your enemies closer"?
It means, basically, to keep a close eye on your enemies because you can trust your friends to have your back. Or at least, that's what it means to me. Now, I don't have any serious enemies(that I know of, anyway), but I have some of the most awesome friends ever. Not only do they help me out when I find myself in need of a beta reader, but they even let me base characters off of them. Such a situation doesn't always come up roses, though.
You see, one thing I've noticed during my writting is that even characters based on real life folk still walk their own road. They become truly themselves and no one else.
It's kinda creepy.
Now, if you friends don't care, that's fine, but some people do. They see the character, so clearly them doing something they would never do and they get mad or hurt. The friend complains to the author who finds themselves between a rock and a hard place trying to accommodate their friend and keep the story in one piece.
A favorite author of mine had someone ask her how she came up with her characters. Not only did she write a very good response and put it in her FAQ on her website, she also responded to the unspoken question there: what do you do when the person on whom you've based a character calls you out on it.
Quoted directly from her website, here is what she had to say....
I often start with a real person--if not someone I know, then an actor or actress I think would fit the part. It's easiest for me to start with what someone looks and sounds like--if I know that, then I know about the character's personality. As a result, I use a lot of photographs of people or performers. Of course, there always comes a point, as I'm working, when the character breaks away from the person I based her/him on to become her or his own self. That's how I know I'm doing it right. A word of warning: tell no one that you based a character on her/him. Even if you think you've written about that person perfectly, s/he may not like what you have to say, or if the character you create starts doing things the person you based the character on doesn't do, they can get quite vexed. If they ask, lie. If you're a bad liar, like me, practice in front of a mirror. Do not tell them.
I love Tamora Pierce's books and I think she gives good advice on being a writer and an author. Now, I didn't read this until I had already told both people (yes, just two characters were based heavily on real folks) that I'd used them in my book. Neither of them minded, thank goodness, but they could have. I still base characters on real people, but now I'm careful to keep just who inspired who behind my teeth.
Remember, no one needs to know they were the inspiration for this character, or that one. After all, they may not like what they see reflected in the words you've put on the page.
Think about it :)
~Sun and Moon