Custom post types and category archive

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If I understand correctly you have something like so:

  • Category A (Using Template 1)
    • Sub-Category 1 (Using Template 2)
    • Sub-Category 2 (Using Template 2)
  • Category B (Using Template 1)

You might need to add this to your archive-products.php as a conditional to test if a category has children, and if so show a different layout or design:

<?php 
    $this_category = get_category($cat);
    if (get_category_children($this_category->cat_ID) != "") {
        // Category has NO children
    }
    else{
        // Category HAS children
    }
?>

Found this answer here: different-template-for-subcategory-any-conditions by triplebull

Hopefully it helps!