diff --git a/apps/microtvm/arduino/template_project/microtvm_api_server.py b/apps/microtvm/arduino/template_project/microtvm_api_server.py
index 3d25d0bcad8f..27248e65cbfb 100644
--- a/apps/microtvm/arduino/template_project/microtvm_api_server.py
+++ b/apps/microtvm/arduino/template_project/microtvm_api_server.py
@@ -152,7 +152,7 @@ def server_info_query(self, tvm_version):
         return server.ServerInfo(
             platform_name="arduino",
             is_template=IS_TEMPLATE,
-            model_library_format_path=MODEL_LIBRARY_FORMAT_PATH,
+            model_library_format_path="" if IS_TEMPLATE else MODEL_LIBRARY_FORMAT_PATH,
             project_options=PROJECT_OPTIONS,
         )
 
@@ -352,7 +352,7 @@ def generate_project(self, model_library_format_path, standalone_crt_dir, projec
 
         # Unpack the MLF and copy the relevant files
         metadata = self._disassemble_mlf(model_library_format_path, source_dir)
-        shutil.copy2(model_library_format_path, source_dir / "model")
+        shutil.copy2(model_library_format_path, project_dir / MODEL_LIBRARY_FORMAT_RELPATH)
 
         # For AOT, template model.h with metadata to minimize space usage
         if options["project_type"] == "example_project":