The customer cannot publish the solution with Model-driven App to Template in Power Platform Catalog, but they can publish the same solution to Managed Item. All other solutions (with Canvas App or Flow) can be published as Template with no error. Please to include Model-Driven App to Template in Power Platform Catalog.

Please help upvote this the Idea ticket about the model-driven app in template

This is currently a product limitation as certain components aren't supported for use as templates.