What is the best method of having a multilingual site?

Whats the best method of having a multi lingual site? I plan on having a little language toggle but need to figure out the best way of setting it up. Here are the options I`m thinking of. 1. Cloning the site under multiple directories e.g domain/fr | domain/en 2. Having a script that replaces the language directly. Which is better for SEO and more user friendly? If I choose option 1, will I run into duplicate content issues?