No, you can use it to get rid of the letter they show around, or to reset their catchphrase to "uh-huh". Also, if they're wearing a custom design you can use it to reset it to the default white and blue t-shirt. It doesn't affect friendship in any way whatsoever
So it resets everything to a universal default? So if someone were to say that Zucker had a mean catchphrase, it wouldn't go back to his default, but "uh-huh"