On new iPad, "notify me" button does not function in Find My Friends
This has to do with your friends and not your device. I haven't nailed down exactly why some of my friends allow me to set geo-fenced alerts and others do not.

I don't see a setting to disable it other than the Show Geofence Alerts From: which implies that I can restrict those I see - not those I share with.

Sorry I can't offer a perfect fix, but this is something on the account / friend's side of things and not a switch you can control on your device.