diff --git a/lib/vmpooler/providers/vsphere.rb b/lib/vmpooler/providers/vsphere.rb
index e9160b2..f3d9e70 100644
--- a/lib/vmpooler/providers/vsphere.rb
+++ b/lib/vmpooler/providers/vsphere.rb
@@ -188,9 +188,27 @@ module Vmpooler
               template: false
             )
 
+            begin
+              vm_target_folder = find_folder(target_folder_path, connection, target_datacenter_name)
+            rescue => _err
+              if _err =~ /Unexpected object type encountered/
+                vm_target_folder = nil
+              else
+                raise(_err)
+              end
+            end
+            if vm_target_folder.nil?
+              if $config[:config]['create_folders'] == true
+                dc = connection.serviceInstance.find_datacenter(target_datacenter_name)
+                vm_target_folder = dc.vmFolder.traverse(target_folder_path, type=RbVmomi::VIM::Folder, create=true)
+              else
+                raise("Unexpected object type encountered while finding folder")
+              end
+            end
+
             # Create the new VM
             new_vm_object = template_vm_object.CloneVM_Task(
-              folder: find_folder(target_folder_path, connection, target_datacenter_name),
+              folder: vm_target_folder,
               name: new_vmname,
               spec: clone_spec
             ).wait_for_completion