When a parent folder is set to Manage permissions and its segmented bar is fully blue, all subfolders automatically receive the same Manage permissions. In this configuration, it isn't possible to assign different permissions to individual subfolders.

To assign custom permissions to subfolders:

1. Change the parent folder’s permission to Hidden, which is shown as a red dot.
2. Assign the desired permissions to each subfolder individually.

 

When setting permissions for each subfolder the parent folder automatically changes from Hidden to View so a role can "pass through" and see the subfolders.