IPhone – find out who is tracking the iPhone

Any service (Find my Friends, Find my iPhone etc) that requests the location will show the little compass icon in the status bar as the location is requested.

You can also see apps that have recently accessed your location within the last 24 hours in Settings > Privacy > Location Services

For more information, see iOS 6: Understanding Location Services

No, simply using Find My iPhone to find the location of the phone doesn't record the action anywhere.

Turning off location services will mean that Find My iPhone won't be able to obtain the location, unless Lost Mode is activated.

In iOS 7, if you turn off Location Services and use Find My iPhone Lost Mode, Location Services will be re-enabled on the device as long as the device is in Lost Mode.

^{Source: http://support.apple.com/kb/HT5594}