We investigate a fronthaul-limited cell-free massive multiple-input multiple-output (CF-mMIMO) system and propose a hybrid centralized-distributed precoding strategy that dynamically adapts to varying fronthaul and spectral efficiency (SE) requirements. The proposed approach divides users into two groups: one served by centralized precoding and the other by distributed precoding. We formulate a novel optimization problem for user grouping and power control aimed at maximizing the sum SE, subject to fronthaul and per-access point (AP) power constraints. To tackle the problem, we transform it into a tractable form and propose efficient solution algorithms. Numerical results confirm the hybrid scheme's versatility and superior performance, consistently outperforming fully centralized and distributed approaches across diverse system configurations.
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