Colonel turns up with friend nearby (7)
I believe the answer is:
Here is my best explanation:
'nearby' is the definition.
(I've seen this before)
'colonel turns up with friend' is the subsidiary indication.
'colonel' becomes 'col'.
'turns up' is a reversal indicator.
'with' means one lot of letters go next to another.
'friend' becomes 'ally' ('ally' can be a synonym of 'friend').
'col' reversed gives 'loc'.
(Other definitions for locally that I've seen before include "Within a particular area", "Nearby", "In the immediate neighbourhood", "Happening in neighbouring district", "In the surrounding area", "In the vicinity" and "Near home".)