You can be encrypting a folder with a sub-folder to enabling the include sub-folder feature.
You without enabling this feature AxCrpy cannot encrypt the sub-folder. AxCrypt only encrypting the folder, not sub-folder.
You can encrypt a folder by using the Secured Folders option. After that, if you create a subfolder, it won’t re-encrypt the files of the subfolder.
We can include the sub-folder by enabling the feature from the AxCrypt app menu File | Options | Include Subfolders. By default Include Subfolders will be disabled. So Sub-folders are not encrypted without enabling this feature.
Still, if you are facing any questions/issues, please write an email to firstname.lastname@example.org with some more information about the issue.