I'm pretty sure they're father and daughter, and I don't think the dad was in on it. If he was, they wouldn't have bothered with brainwashing him as well. Honestly, regardless of circumstance, her willingness to kill him, means to me that the only way the plot can continue (at least in the sense that she doesn't want to see him dead anymore) is erasing both their memories.
For the life of me, I don't know why he would even bother trying to look at her or care what happens to her after she shot the gun at him. The only interesting plot I can see moving forward is the "why" this all happened in the first place. Any resemblance of relationship at all is gone...even if the dad tells her everything he overheard, she would just turn around and see if there is anything they can do to help get rid of her dad, probably offering herself as a slave to make it happen.