Any way to locate iPhone if location services off?

No.

Is there a way to get notified when someone turns off their location services?

Friend told me someone had their phone on a family id - all phones showed up in find my iphone - but as far as I could tell, there is nothing in find my iphone that notifies you when someone goes offline unless you are looking at it right then.. but they turned their location services off and the other party called and told them their phone just went offline... how can I do that for my kids??

I don't think that's possible on a non-jailbroken phone. I'm not aware of any app that would do that either.