Bootloader on ATmega32u4RC

I designed a development board with the Atmel ATmega32u4RC that has an external 16MHz crystal and having issues with the bootloader installation. The board was designed so that I could use Atmel Studio but I also wanted the ability to upload the Leonardo bootloader that is on the Arduino Micro so my son could get comfortable with code development.

So far I have successfully been able to write and execute code written in Atmel Studioand upload it to the MCU via my Atmel ICE programmer. In the fuse selection, I have the external oscillator selected and verified the functionality by changing my F_CPU clock and monitored the timing.

The problem I have is when I select the Leonardo bootloader hex file located at (C:\Program Files (x86)\Arduino\hardware\arduino\avr\bootloaders\caterina\Caterina-Leonardo.hex) the device will show up as an Arduino Leonardo. Once I upload the code, I get an error message stating it cannot find the board.

I am curious if this has something to do with the processor being a ATmega32u4RC and not the ATmega32u4 that is used on the Arduino Micro?

Any help is much appreciated!