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Hi Michael,
I’d like to explain that when we click create site in the SharePoint home page, it will create a site collection for Office 365 group. This site collection will use the team site template. We cannot create a site collection with custom template for Office 365 group site collection.
If you want to create a site collection with your custom template, you can access SharePoint admin center>site collections>New>Private Site Collection> in the pop-up click Custom>Select template later…>configure other settings>click OK. After the new site collection is created, click its link for accessing. You will get a page to choose template>click Solution Gallery>it will redirect you to the solution gallery for this new site collection>upload and activate your custom template, and then you are able to select this custom template to create new site collection.
Meanwhile, when you upload the custom template to the default team site’s solution gallery, you can create new subsite based on this custom template. Each site collection has its own solution gallery. We can only create sub site in the site collection with the template in its solution gallery.
Moreover, Office 365 Group site (the site created by clicking Create Site button) and the default Team site are all site collections. We cannot see Office 365 group site in SharePoint admin center.
Best regards,
Tim