A friendly refusal can be clear and short: "Thanks for inviting me. I cannot make it on Friday." You can appreciate the invitation without accepting it or inventing a complicated explanation.
If you want to give a reason, one relevant sentence is often enough: "I already have plans that evening." Personal detail is optional, and expectations about explanations vary with the relationship and setting.
Distinguish refusal from rescheduling
Compare two endings. "I hope you all have a good time" closes this invitation warmly. "Would you like to meet for lunch next week instead?" proposes a different plan. Use the second only if you want to make that plan.
Practice a follow-up. Friend: "Could you come later?" You: "I will not be able to join this time, but thank you for asking." Repeating the clear limit is more helpful than an uncertain "Maybe" when you already know the answer.
For a formal event, the response may need a written reply through the requested channel. For a casual chat, a natural spoken sentence may be sufficient. Role-play both contexts and compare the wording. Check that the listener can tell whether your answer is no, uncertain, or a proposal for another date. Kindness works best when it accompanies a response that does not leave someone waiting for a decision you have already made.