If your friend played as a guest then it will not save his character, you would have to create a new profile to have his character saved
UK Xbox Deals
As 24hrs said .... When your friend activates his controller, he should press the silver button to log in that controller to a separate account, or create a new one if necessary.
Be aware we are not saying he needs a gold subscription just an account of his own to save his own stats, characters etc while playing local coop